Macro

China's railway investment may reach new high this year

China's railway investment may reach new high this year

China is likely to see total investment in the railway sector hit a new high this year, the Economic Information Daily reported on April 14.

China Railway Corporation plans to kick off construction on 45 projects in 2016 and put more than 3,200 kilometers of new railway lines into operation, including 1,300 kilometers of high-speed rail, according to the newspaper.

At a recent meeting on railway construction, Chinese Vice Premier Ma Kai urged the railway sector to make an effort to ensure that railway investment exceeded 800 billion yuan this year.

Last year, the railway sector registered 823.8 billion yuan ($127.16 billion) in fixed-asset investment, including 9,531 km of new railway lines, of which 3,306 km were high-speed rail. By the end of 2015, a total of 121,000 km of railway lines were in operation, including more than 19,000 km of high-speed rail, which accounted for more than 60% of the world's total.

Wang Mengshu, a member of the Chinese Academy of Engineering, sees no difficulty in meeting the goal, and said actual investment may even surpass 800 billion yuan if all projects run smoothly, according to the report.

China's Economy Stabilized in First Quarter

China’s economy stabilized last quarter and gathered pace in March as a surge in new credit spurred a property sector reboundwhile raising fresh questions over the sustainability of the debt-fueled expansion.

Gross domestic product rose 6.7 percent in the first quarter from a year earlier, meeting the median projection of economists surveyed by Bloomberg and in line with the government’s growth target of 6.5 percent to 7 percent for the full year. New credit, industrial output, fixed-asset investment and retail sales picked up in March and beat analysts’ forecasts.

Signs of stabilization in the world’s second-biggest economy and bets on a subdued pace of U.S. monetary tightening have helped lead to recent rallies in oil, metals and global equities. Surging credit in March now shifts concern back to the durability of the recovery, how much financing is propping up zombie companies, and whether the market-driven reforms needed to boost new growth drivers will quicken.

“The economy has stabilized thanks to a flood of liquidity and improved sentiment in the property market,” said Tao Dong, head of Asia economics excluding Japan at Credit Suisse Group AG in Hong Kong. “It is not clear whether the momentum is sustainable. So far, the government seems to be the solo singer. It is critical to re-engage private investment.”

Aggregate financing was 2.34 trillion yuan ($360.7 billion) in March, the People’s Bank of China said, as monetary easing filtered through the financial system. Quarter-on-quarter growth in the first three months of this year was more than double the pace during the prior period, said Tim Condon, head of Asian research at ING Groep NV in Singapore.

Debt Pileup

“The flip side of strong credit growth is that debt keeps piling up,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. “This can’t continue. The key is efficiency of credit use because we know that some of the credit is used to keep these zombie companies alive.”

The easy credit helped home sales jump 71 percent in March from a year earlier while investment in real estate development surged 6.2 percent in the first quarter from a year earlier.

Fixed-asset investment jumped 10.7 percent in the first three months from a year earlier, as property construction rebounded. About 30 percent of new non-financial credit flowed to local governments and their investment vehicles in the first quarter, said Harrison Hu, chief Greater China economist at Royal Bank of Scotland Plc in Singapore.

“With the hard data confirming China’s cyclical recovery, it’s time to think about sustainability,” Hu wrote in a note. “The fragile property upturn, credit misallocation and policy fine-tuning will cap the strength and duration of the upswing.”

Industrial output expanded 6.8 percent in March from a year earlier and retail sales rose 10.5 percent. The survey-based unemployment rate rose slightly in March to a range around 5.2 percent, a statistics bureau official said.

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China's outbound investment rises in Q1

Chinese companies continued to invest big in the overseas market in the first quarter (Q1) of the year, new official data shows.

China's non-financial outbound direct investment (ODI) jumped 55.4 percent from a year ago to 261.74 billion yuan (40.34 billion U.S. dollars) in Q1, the Ministry of Commerce said Thursday.

Hong Kong attracted the most investment from the Chinese mainland, accounting for 51.6 percent of the total, while investment to the United States more than doubled to 5.24 billion U.S. dollars. ASEAN received a total of 2.29 billion U.S. dollars of investment, up 44 percent year on year.

Some 5.4 billion U.S. dollars was invested in manufacturing in Q1, up 125.9 percent, nearly half of that channeled to equipment manufacturing.

The ministry said the Belt and Road initiative was a major push to business cooperation between Chinese and foreign firms. ODI to countries involved in the initiative was 3.59 billion U.S dollars, an increase of 40.2 percent year on year.

ShareSoc advises investors to reject Anglo American CEO pay packet

Investor interest group ShareSoc says Anglo American's proposed remuneration for CEO Mark Cutifani is too high and urged shareholders to reject it at next week's annual general meeting.

The mining giant, which posted steep losses last year due to the slump in commodity prices, has sought to offset poor trading conditions with a restructuring plan that led to a 50 percent reduction in head office costs and the closure of 20 mines since 2013, ShareSoc said.

However, CEO remuneration has not been reduced to reflect the smaller, simpler company that Anglo now is, the group added.

ShareSoc said Cutifani was still set to receive 6.3 million pounds ($8.9 mln) for target performance and 8.8 million pounds for "above" target performance.

"We consider the pay of the CEO to be too high, and particularly so in a year when the company suffered a loss of $5.6 billion in 2015 and dividends were suspended," the group said in a statement on Thursday.

News of its opposition to Anglo American's pay proposals came as 59.1 percent of investors in BP voted down the oil company's plan to pay its CEO Bob Dudley a $19.6 million remuneration package.

Shares in Anglo have fallen 34 percent in the past 12 months, shrinking its market capitalisation to 10 billion pounds from around 50 billion pounds in 2008.

"We believe we have a remuneration policy that was approved at the 2014 AGM that strikes the right balance between stretch and achievability, designed to support the company's strategic objectives and aligned with shareholders' interests," a spokesman for Anglo said in an emailed statement.

"As an illustration, our chief executive's total remuneration decreased by 17 percent in 2015, his salary has been frozen and his bonus decreased by around 40 percent," the spokesman added.

U.S. Trade Representative says deal with China covers all aspects of subsidy program

China has agreed to scrap controversial export subsidies on a range of products from steel and aluminum to agriculture and textiles, the U.S. Trade Representative said on Thursday.

In a deal coinciding with global economic meetings in Washington, the trade representative office said in a statement that China has agreed to end a program known as its "demonstration bases-common service platform" in which it provides export subsidies to Chinese companies in seven economic sectors.

The agreement is a step by Beijing to reduce trade frictions with the United States that range from steel and agricultural products to technology and banking.

It comes about a year after the United States filed a complaint with the World Trade Organization about the program, alleging "unfair, prohibited export subsidies to a large range of Chinese manufacturers and producers."

"This agreement addresses all elements of the massive and complex export subsidy program," U.S. Trade Representative Michael Froman said in the statement.

The Chinese industries that have received the subsidies under the program include textiles, light industry, specialty chemicals, medical products, hardware, agriculture and metals such as steel and aluminum, the trade representative's office said.

Last year, the U.S. trade office estimated that suppliers of subsidized services to Chinese exporters received more than $1 billion from the Beijing government over three years and some companies received at least $635,000 in support annually. The WTO created a panel to hear the U.S. complaints in April 2015.

Since it joined the WTO in 2001, China has frequently attracted complaints that its exports are being "dumped," or sold at unfairly cheap prices on foreign markets. Under world trade rules, importing countries can impose punitive tariffs on goods that are suspected of being dumped.

China's Central bank pumps more money into market

China's central bank on Thursday pumped more money into the market to ease a liquidity strain.

The People's Bank of China (PBOC) conducted 40 billion yuan (6.2 billion U.S. dollars) of seven-day reverse repurchase agreements (repo), a process in which central banks purchase securities from banks with an agreement to resell them in the future.

The reverse repo was priced to yield 2.25 percent, unchanged from Wednesday's injection of 40 billion yuan, according to a PBOC statement.

The move followed a net injection of 60 billion yuan and 15 billion yuan into the financial system on Tuesday and Monday, respectively.

In Thursday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, climbed by 3 basis points to 1.999 percent.

Alice in Wonderland

“Every day is like being Alice in Wonderland,” said Tomohisa Fujiki, head of interest-rate strategy at BNP Paribas Securities Japan. “Interest-rates levels are having no effect on credit demand, the market function is declining. You can’t expect everything to go according to plan.”

China's economy could be in more trouble than we think

Rail freight volumes are an indicator of China’s goods-producing and goods-consuming economy, not just manufacturing, construction, agriculture, and the like, but also consumer goods. Thus they’re also an indication of consumer spending on goods. Alas, rail freight volume is collapsing: the first quarter this year puts volume for the whole year on track to revisit levels not seen since 2007.

While China’s economy was strong, rail freight volumes were soaring. For example, in 2010, when China was pump-priming its economy, rail freight volume jumped 10.8% from a year earlier. In 2011, it rose 6.9%. It had soared 44% from 2005 to 2011! But 2011 was the peak.

In 2012, volume in trillion ton-kilometers declined one notch and in 2013 stagnated. But in 2014, volume skidded 5.8%. And in 2015, volume plunged 10.5% to 3.4 billion tons, according to Caixin, citing figures from the National Railway Administration. It was the largest annual decline ever booked in China.

It was a year that the People’s Daily, the official paper of the Communist Party, described in this elegant manner:

Dragged by a housing slowdown, softening domestic demand, and unsteady exports, China’s economy expanded 6.9% year on year in 2015, the weakest reading in around a quarter of a century.

Which is precisely where things stop making sense: rail freight volume plunges 10.5% in 2015, and the economy still increases 6.9%? I mean, come on.

At the time, Caixin said that China’s central planners aimed to increase rail freight volumes to 4.2 billion tons by 2020. This would assume an average annual growth rate of 4.3%. So these declines are not part of the planned transition to a consumption-based economy. They’re totally against that plan or any other plan. They’re very inconvenient for the rosy scenario!

Then came the first quarter of 2016.

Rail freight volume plunged 9.4% year-over-year to 788 million tons, according to data from China Railway Corporation, cited today by thePeople’s Daily. At this rate, rail freight volume for 2016 will be down 20% from 2014, which had already been a down year! At this rate, volume in 2016 will end up where it had been in 2007!

China — hobbled by soggy domestic demand, perhaps even soggier demand overseas, rampant factory overcapacity, cooling investment, an insurmountable mountain of bad debt, and a million other domestic problems — may be trying to transition from a manufacturing-based economy to an economy based on consumption.

REUTERS/Carlos BarriaNewly-elected General Secretary of the Central Committee of the Communist Party of China (CPC) Xi Jinping speaks as he meets with the press at the Great Hall of the People in Beijing, November 15, 2012.

But even consumer goods must be transported, even those purchased online! Only services don’t require much transportation. But we doubt that service sales have jumped in two years to the extent that they would even halfway make up for the crashing demand for goods transported by rail.

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Following Double-Fed Emergency Meetings, China Devalues Yuan By Most In 3 Months

After weeks of "stability," and following two emergency Fed meetings in 3 days (and an unexpected ease by MAS), The PBOC decided today was the right time to drastically slash the Yuan fix by 300 pips. This is the largest devaluation of the Chinese currency since January 7th (and second largest since August's world-market-turmoiling devaluation). Offshore Yuan had been tumbling all day (shrugging off the supposedly better trade data as FX traders saw through the colossal spike in imports from HK as indicative of capital outflows), and is falling further following PBOC's cut.

As Bloomberg's Tom Orlik notes, China's March imports from Hong Kong soared an implausible 116% YoY! As it is clearly disguising capital flows...

Trade mis-invoicing as a way to hide capital flows remains a factor. In the past, over-invoicing for exports was used as a way to hide capital inflows.

The latest data show the reverse phenomenon, with over-invoicing of imports as a way of hiding capital outflows.

All of this chaos amid the biggest short-squeeze in US stocks in 6 months makes us wonder if something serious is not breaking behind the scenes and every effort is being made to put lipstick on this pig.

The Fed Just Held An Emergency Meeting To Discuss Capital Markets

As we reported on Friday morning, in a surprise announcement the Fed revealed under its "Government in the Sunshine" protocol that it would hold a closed meeting under expedited procedures in which it would review the "advance and discount rates to be charged by Federal Reserve Banks." The last time such a meeting took place was less than a month before the Fed hiked rates for the first time in years.

What took place during the meeting will remain a mystery, however what made it particularly interesting is that just hours later it was followed by another impromptu closed-door session, this time between president Obama and Janet Yellen.

What information was exchanged during the follow up meeting is also a secret, although the White House was kind enough to release the following statement:

"The President and Chair Yellen met this afternoon in the Oval Office as part of an ongoing dialogue on the state of the economy. They discussed both the near and long-term growth outlook, the state of the labor market, inequality, and potential risks to the economy, both in the United States and globally. They also discussed the significant progress that has been made through the continued implementation of Wall Street Reform to strengthen our financial system and protect consumers."

We also will never know if there is any coincidence between these two meeting and the fact that just after they took place, the S&P went from red on the year to fresh 2016 highs in under two days.

China’s snow job continues.

China's electricity consumption rose at a faster pace in March as economic activity and residential demand picked up, showed data from the National Development and Reform Commission (NDRC) on April 13.

Power consumption rose 5.6% on year in March, reaching 476.2 TWh, said Zhao Chenxi, spokesperson for NDRC, at a press conference. The growth accelerated by 1.6 percentage points from February and improved markedly from a 2.2% contraction in March last year.

In the first quarter of 2016, power use increased 3.2% year on year to 1,352.4 TWh, with the growth rate up 2.4 percentage points from the same period last year, said Zhao.

He attributed the recovery to stronger demand in the service sector and households, which contributed to an increase of 3 percentage points in the first-quarter growth.

Power consumption by Chinese households gained 10.8%, up 8.2 percentage points on year.

Electricity used by the agricultural and industrial sector climbed 7.8% and 0.2% respectively in the first quarter, exiting negative territory but still at a relatively low level of growth, the spokesperson said.

Power use by the service sector jumped 10.9% year on year in the first three months, up 4 percentage points from a year earlier.

The financial, real estate, catering and hotel industries all recorded faster increases in power consumption, Zhao added.

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Shanghai Accord?

This information involves the secret ‘Shanghai Accord’ reached on the sidelines of the G-20 central bankers meeting in Shanghai, China, on Feb. 26.

The situation confronting the central bankers was the following: China needs to devalue its currency to rescue the Chinese economy. But the last two times China devalued against the U.S. dollar (August 2015 and January 2016), the U.S. stock market sank like a stone. This threatened to set off global financial contagion that could lead to a repetition of the 2008 panic, except worse. The challenge was to find a way to give China some currency relief without igniting a global stock market collapse.

The solution is to recognise that the US dollar and the Chinese yuan are not the only two currencies in the game. China has a larger combined trading relationship with Japan and Europe than it does with the U.S. The secret plan devised by the central banks has three parts: Tighten in Europe and Japan, ease in the U.S. and maintain the U.S.-China peg.

By maintaining the US-China peg, markets would not panic about Chinese devaluation. In fact, by easing the US dollar, China could ease the yuan and still maintain the peg. It’s just a case of follow the leader.

Meanwhile, the stronger euro and yen gave China competitive relief in its trading relations with those trading giants.

Voilà! The Chinese got currency devaluation, and the world hardly noticed.

How do we know this? After all, this plan was never publicly disclosed.

The secret summit took place on 26 February. Our hypothesis was that a plan to give China some relief was on the front burner. What subsequent facts enabled us to update the hypothesis (as Bayes’ theorem requires) to confirm or contradict the hypothesis?

We used the following:

On March 10, Mario Draghi, head of the European Central Bank, delivered the expected ease, but then surprised markets by saying that was the last round of easing. Relative to expectations, this ‘timeout’ was a tightening, and the euro rallied

On March 15, Haruhiko Kuroda, governor of the Bank of Japan, failed to deliver the additional ‘QQE’ (qualitative and quantitative easing) markets expected. This was also tightening relative to expectations, and the yen rallied

On March 16, Janet Yellen and the Fed’s FOMC took a pass on interest rate hikes. This was expected, but Yellen’s comments in the post-meeting press conference were surprisingly dovish. This led to initial declines in the US dollar, a form of ease

On March 29, Yellen delivered a blockbuster speech to the Economic Club of New York. In the speech, she did not merely hint at dovish tendencies — she made them explicit. Yellen adopted an asymmetric test that raised the bar significantly for future rate hike increases. Markets immediately repriced to these new expectations and the dollar cratered. Yellen’s turnabout delivered on the US easing part of the secret Shanghai Accord.

From an analytic perspective, the case is overwhelming. We had four powerful confirmation points and no contrary evidence. The odds of these four critical events happening in a short time frame without coordination are miniscule. The odds in favour of the existence of the Shanghai Accord are high. There has been no official denial.

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Did BHP just call the bottom of the mining cycle?

BHP Billiton chief executive Andrew Mackenzie was upbeat about the outlook for the world's top mining company in an interview published in the The Australian.

A turnaround in the prices of the commodities the Melbourne-based giant produces would be volatile and prolonged and in some cases markets will take "a very long time" to come back into balance Mackenzie told the newspaper.

"If you look at the basket of commodities that we deal with, the numbers are self-evident: the fall has stopped"

Nevertheless, Mackenzie believes the worst may be over:

“We’re not looking at the screens and things continue to go down, down and down. And yet we are able to look at our numbers to see costs going down, down, down.

“If you look at the basket of commodities that we deal with, the numbers are self-evident: the fall has stopped.”

Given this week's rallies in crude oil (which would also help to stop deflation in other sectors), iron ore, coking coal and base metals, MacKenzie's timing may be spot on.

All the commodity prices tracked below are now trading above recent troughs, even if some still show declines year to date. In many instances the recovery has been from multi-year slumps and that includes bellwether copper which in January declined to seven-year low below $2.00 a pound even if the red metal is only back in positive territory for 2016 after today's 3% advance.

After massive back to back rallies iron ore is 58% above its $37 a tonne near decade low struck in December

Before today's jump in crude oil to $42 a barrel which brought its advance from 13-year lows hit February to 58.9%, iron ore's turnaround was the most impressive. After massive back to back rallies iron ore is 58.1% above its $37 a tonne near decade low struck December 11.

Gold and silver seemed to rebound just as 2016 was getting started, but platinum fell to a 2008 low in January before retracing all the way back into a bull market (defined as a 20% move from a low). Palladium has also been dug out of its hole, but year to date the metal is weaker.

Australian hard coking coal has followed iron ore higher and the country's thermal coal exports have also inched up although few predict upside from current levels around $55 a tonne. Uranium fell to a near decade low at the beginning of April, but the spot price recovered slightly to $28.50 a pound last week.

The exception (that hopefully proves the rule) is potash. Producers are currently locked in negotiations with China about contract prices, butpredictions are for a big leg down from last year's $315 a tonne. Perhaps Mackenzie was referring to potash (and not the usual suspect iron ore) when he said some commodities may be bumping along the bottom for "a very long time."

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Iceland's Pirate Party Polls At Stunning 43% Following PM's Resignation

So what is the Pirate Party? Motherboard explains:

Founded in 2012, the Icelandic Pirate Party was modeled after the Swedish organization of the same name founded six years earlier. An anti-establishment party founded on principles of direct democracy, copyright reform, and personal privacy, the Icelandic Pirate Party elected its first representatives to Parliament in 2013.

Sounds good to me.

In recent years, the Pirate Party has enjoyed an astounding level of popularity in the country, becoming the most popular political party in Iceland in early 2015. In the wake of the Panama Papers scandal the Party’s popularity has only increased, with a recent poll suggesting that 43 percent of the roughly 320,000 people that call Iceland home support the Pirates.

Although the Pirates have yet to name a candidate for prime minister, Helgadóttir expects the Party to put forth a nomination in the near future. She remains optimistic that the Pirates will have a solid base going into the elections and anticipates the party gaining several more seats in Parliament. Beyond that, said Helgadóttir, she and her colleagues are just taking things one day at a time, waiting to see how Iceland’s political drama unfolds.

“I’m really excited to see who is going to answer our call when we ask people to join us,” said Helgadóttir. “It’s going to be a real party, not just a political party. This is a chance to fix this broken democracy that we have and maybe it will survive this crisis that democracies all around the world are facing. We’re going to have so much fun together, and if [our agenda] goes through, democracy might have some hope in this world.”

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Brazil police arrest former senator in Petrobras investigation

Brazilian police arrested former senator Gim Argello and launched raids in three states on Tuesday as part of a massive corruption investigation centered at state-run oil firm Petrobras, federal prosecutors said.

The 28th round of police raids in the so-called "Operation Car Wash" was based on evidence that Argello took bribes to ensure executives at major infrastructure companies would not be called to testify at a congressional committee in 2014, prosecutors said.

"These are alarming facts because they strongly suggest that a congressional investigative committee, which has an important role in our democracy, was used by a senator for corruption instead of fighting it," prosecutor Athayde Ribeiro Costa said in the statement.

The two-year investigation has uncovered systemic corruption across multiple companies, including state-run oil producer Petroleo Brasileiro SA , and the highest levels of government since the Workers' Party took power in 2003.

The probe has given powerful momentum to impeachment proceedings against President Dilma Rousseff, even though she herself is not being investigated.

Prosecutors said construction firms UTC Engenharia SA and OAS SA paid Argello 5 million ($1.44 million) and 350,000 reais ($100,519), respectively. Executives at those firms were arrested at earlier stages of the probe.

Other builders are being investigated, according to the statement.

Representatives at UTC and OAS did not respond immediately to requests for comment. OAS requested bankruptcy protection last year.

Dozens of executives from Brazil's top construction and engineering firms have been charged with bribery and money laundering, and about 50 politicians are being investigated for receiving kickbacks off contracts with Petrobras.

Tuesday's police raids took place in the states of Sao Paulo and Rio de Janeiro and in the federal district, according to a police statement. Potential crimes under investigation include corruption, money laundering and criminal association.

Fitch cuts Saudi Arabia's IDR ratings to 'AA-' from 'AA'

Fitch Ratings said on Tuesday it had cut Saudi Arabia's long-term foreign and local currency issuer default ratings to 'AA-' from 'AA' with a negative outlook as oil prices remain weak.

"The downward revision of our oil price assumptions for 2016 and 2017 to $35/b and $45/b, respectively, has major negative implications for Saudi Arabia's fiscal and external balances," the ratings agency said in a statement.

Brent crude was trading at $43.42 on Tuesday.

Fitch also said it also considered Saudi Arabia's geopolitical risks to be high relative to 'AA'-rated peers, noting tensions with longstanding rival Iran and Riyadh's military intervention in Yemen and Syria.

The agency said it expected Saudi Arabia's deficit-to-GDP ratio to narrow only marginally in 2016 and more substantially in 2017 on the back of a moderate recovery in oil prices.

The government's deficit widened to 14.8 percent of GDP in 2015 from 2.3 percent in 2014 after continuous surpluses since 2010, Fitch noted.

Chinese courts have ordered cash-strapped Shandong Shanshui Cement Group Ltd to pay back its creditors 2.4 billion yuan ($372 million), the company said in a statement posted on the Shanghai Clearing House website on Tuesday.

The company said it was unlikely to be able to make the required payments due to financial difficulties, and the courts would take steps such as auctioning off the firm's assets to meet these obligations.

Defaults have accelerated among Chinese companies, particularly in the heavy industrial sectors including steel and cement, which have been hard hit by China's economic slowdown.

Bond defaults by the cement maker, a subsidiary of Hong Kong-listed China Shanshui Cement Group Ltd, had led creditors to turn to legal avenues to seek repayments.

Shandong Shanshui Cement's statement to the clearing house outlined the current status of almost 100 suits against the indebted company and showed that various courts had ordered it to pay back principal and interest to creditors burnt by unmet bond repayments.

Reuters was unable to reach Shandong Shanshui Cement for comment.

Courts have ruled on eight out of a total 96 cases against the company, although these were some of the largest suits, the statement showed. The total amount being sought is around $764 million.

The courts have ordered repayments to be made to creditors including China Merchants Bank, Qilu Asset Management and regional lender China Guangfa Bank (CGB).

Is it time to be overweight resources?

IMF cuts growth numbers

The International Monetary Fund just slashed its global growth forecast for the fourth time in a year, underscoring just how much policymakers around the world are struggling to get the economy back to a stronger footing, and offering another red flag for investors, who have shown signs of caution even as U.S. stocks have rebounded from February lows.

The IMF reduced its forecast of the growth rate by 0.2 percentage point to 3.2% and warned the world economy is increasingly at risk of stalling. The IMF said an exit of the U.K. from the European Union risks “severe” regional and global damage, highlighting yet another risk for the global outlook. A referendum is scheduled this June for the U.K., and market analysts have warned about broad ripples should the U.K. vote to bolt.

VEB: $20bn debt.

Russia’s Most Important Bank Needs a Bailout

VEB faces task of paying off about $20 billion in foreign-currency debt

“VEB is one of my biggest bond positions,” said one trader. “The government knows that it will not let VEB default.”

Meanwhile in Nigeria:

Factories are closing because they can’t find dollars to import parts. Supermarkets are struggling to keep shelves stocked. Power plants have virtually stopped producing electricity because they can’t pay for maintenance. New shopping malls are empty and ordinary citizens are going to lengths to find some basic goods.

Gold: A tough asset.

Brazil congressional committee recommends impeaching Rousseff

Brazil congressional committee recommends impeaching Rousseff

A committee of Brazil's lower house of Congress voted 38-27 on Monday to recommend the impeachment of President Dilma Rousseff, who faces charges of breaking budget laws to support her re-election in 2014.

A vote in the full lower house is expected to take place on Sunday. If two-thirds vote in favor, the impeachment will be sent to the Senate.

If the upper house decides by a simple majority to put Rousseff on trial, she will immediately be suspended for up to six months while the Senate decides her fate, and Vice President Michel Temer will take office as acting president.

It would be the first impeachment of a Brazilian president since 1992 when Fernando Collor de Mello faced massive protests for his ouster on corruption charges and resigned moments before his conviction by the Senate.

A former leftist guerrilla, Rousseff has denied any wrongdoing and rallied the rank and file of her Workers' Party to oppose what she has called a coup against a democratically elected president.

Speaking to thousands of supporters in Rio de Janeiro, Rousseff's predecessor and Workers' Party founder Luiz Inacio Lula da Silva said Brazilian business elites were pressuring lawmakers to remove the president. Lula, who is under investigation in a graft probe, said he had convinced Rousseff to return to policies that favored Brazil's poor.

Caught in a political storm fueled by Brazil's worst recession in decades and the country's biggest corruption scandal, Rousseff has lost key coalition allies in Congress, including her main partner, vice president Temer's PMDB party.

The rift between Rousseff and her vice president reached breaking point on Monday after an audio message of Temer calling for a government of national unity was released apparently by mistake, further muddying Brazil's political water.

Temer's 14-minute audio message sent to members of his own PMDB party via the WhatsApp messaging app showed he was preparing to take over if Rousseff is forced from office.

The audio was posted on the website of the Folha de S.Paulo newspaper and confirmed to Reuters by Temer's aides as authentic. Aides said it was accidentally released and they quickly sent another message asking legislators to disregard it.

ECB Scrambles To Calm A Furious Germany: "Helicopter Money Was The Straw That Broke The Camel's Back"

Over the weekend we reported that in a scathing Spiegel article the German financial media outlet let loose at the ECB with a report according to which Germany is now "taking aim" at the ECB as a result of the imminent launch of Helicopter Money by the Frankfurt-based central bank.

Spiegel even suggested that the German finance ministry would go so far as to sue the ECB to prevent this final monetary paradrop in a desperate attempt to stimulate (hyper)inflation:

Were the ECB, as Draghi has indicated it might, to open the monetary policy gates even wider -- with, for example, helicopter money -- the German finance minister would view it as a breaking point. Such a policy would see the ECB bypass the banking sector and distribute money directly to companies, consumers or states, all of which would stand in violation of the central bank's own statutes. Should it come to that, sources in the German Finance Ministry say, Berlin would have to consider taking the ECB to court to clarify the limits of its mandate. In other words: the German government and Draghi's ECB would be adversaries in a public court case.

Such a legal battle between the government and a central bank would be a first in German history. It could lead to a constitutional crisis of unprecedented severity or to currency turbulence -- which is why it is extremely improbable that the two sides would allow the conflict to escalate to such a degree.

Just a few hours later Schauble went on the record to deny that the Geran finmin would consider taking legal action if the European Central Bank resorts to "helicopter money" but the damage was already done.

As Reuters follows up today, "almost a month after stoking a divisive debate about how far it should go in pumping money into the flagging euro zone economy, the European Central Bank is trying to soothe relations with Germany after unusually strong criticism from Berlin."

Iran says Russia delivers first part of S-300 defence system

Russia has delivered the first part of an advanced missile defense system to Iran, Iranian media reported on Monday, starting to equip Tehran with technology that was blocked before it signed a deal with world powers on its nuclear program.

The S-300 surface-to-air system was first deployed at the height of the Cold War in 1979.

In its updated form it is one of the most advanced systems of its kind and, according to British security think tank RUSI, can engage multiple aircraft and ballistic missiles around 150 km (90 miles) away.

Russia's agreement to provide Iran with S-300 has sparked concern in Israel, whose government Iran has said it aims to destroy.

In a recorded transmission, state television showed Foreign Ministry spokesman Hossein Jaber Ansari telling a news conference on Monday: "I announce today that the first phase of this (delayed) contract has been implemented."

Ansari was replying to reporters' questions about videos on social media showing what appeared to be parts of an S-300 missile system on trucks in northern Iran.

Russia says it canceled a contract to deliver S-300s to Iran in 2010 under pressure from the West. President Vladimir Putin lifted that self-imposed ban in April 2015, after an interim agreement that paved the way for July's full nuclear deal.

The U.S. military has said it has accounted for the possible delivery of the S-300 to Iran in its contingency planning.

China Mar PPI down 4.3pct on year

China’s Producer Price Index (PPI), which measures inflation at wholesale level, dropped 4.3% year on year but up 0.5% month on month in March, showed the latest data released by the National Bureau of Statistics (NBS) on April 11.

In the same period, prices of coal mining and washing industry fell 16.6% on year and down 0.6% on month; prices of oil and natural gas mining industry posted a plunge of 33.8% on year but up 9.9% on month.

Besides, prices of ferrous metal industry dropped 13.1% from the previous year but up 3.6% from February, data said.

In March, Purchasing Price Index of Raw Material dropped 5.2% on year but up 0.3% on month.

In the first quarter this year, China’s PPI dropped 4.8% on average from the previous year; prices of production raw materials fell 5.8% on year.

Of this, the average price of coal mining and washing industry fell 17.3% on year; while the price of oil and natural gas mining industry decreased 36.1% on year; price of ferrous metal industry dropped 16.9% from the previous year, data showed.

The data came along with the release of the Consumer Price Index (CPI), which rose 2.3% from the year prior and unchanged on month in March.

Consumers reacted angrily when the government cut spending on energy subsidies in mid-2014, a measure that caused domestic prices of natural gas, diesel and other fuels to rise by as much as 78 percent. They were reduced again in the current budget.

However, the deputy finance minister for fiscal policy said a decline in international oil prices would account for the bulk of the reduced subsidy spending in the next fiscal year.

"Most of the savings in petroleum product subsidies will be a result of lower global oil prices," the deputy minister, Ahmed Kojak, told Reuters.

"There is also a saving of about 8-10 billion (Egyptian) pounds that will come as a result of new reforms that the Petroleum Ministry will outline in agreement with us," he added.

Egypt is struggling to revive its economy since a popular uprising in 2011 shook investor confidence and drove tourists and foreign investors away. Its foreign currency reserves stood at $16.56 billion in March, down from about $36 billion in 2011.

The government has been trying to cut subsidies, which eat up a big chunk of the budget.

President Abdel Fattah al-Sisi has approved a draft state budget that reduces the budget deficit in the 2016/17 fiscal year to 9.8 percent of gross domestic product (GDP) from the current 11.5 percent.

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US Wholsale Inventories Drop Most Since 2013; Sales Miss As Slowdown Accelerates

There was one thing keeping US GDP growing in recent months: rising inventory. Well, no more. Moments ago the Dept of Commerce reported the latest inventory data and following major historical revisions, not only was last month's inventory print slashes from 0.3% to -0.2%, but the February Inventory number was a dramatic -0.5% drop, far below the -0.2% expected.

It wasn't just inventories: wholesale sales also declined by 0.2%. The ongoing declines refuse to paint a pretty picture of the US economy.

Worse, the nominal dollar spread between wholesale inventories and sales remains at record highs suggesting that the long overdue inventory liquidation has nowhere near begun yet.

There was some good news: the inventories/sales ratio was 1.36, a modest decline from the January print. While perhaps hinting of some long overdue renormalization, this would mean that should inventory selling commence, the US GDP is about to lose as much as 1.5% in annualized growth, potentially pushing 2016 GDP growth to 1% or lower.

And now we wait for the Altanta Fed to update its Q1 GDP model with a negative print.

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Longyuan Power Mar power output up 6.2pct on year

China Longyuan Power Group Co., Ltd, a subsidiary of China Guodian Co., Ltd, one of China’s top five power producers, produced 3.78 TWh of electricity in March this year, up 6.17% from a year ago, the company announced on April 7.

Of this, output of wind power and thermal power increased 5.59% and 8.58% year on year to 2.8 TWh and 934.5 GWh, respectively; that of other renewable energies slid 4.41% from a year ago to 46.8 GWh.

In the first quarter this year, total power generation of the company posted a year-on-year rise of 4.61% to 10.05 TWh. Output of wind power and other renewable energies increased 6.19% and 12.34% on year to 7.34 TWh and 151.4 GWh, separately, while that of thermal power fell 0.06% on year to2.56 TWh.

Power plants in Inner Mongolia reported the largest wind power output of the company in March, which was 413.7 GWh, down 12.3% on year. Total power generation by these power plants over January-March slid 16.19% on year to 1.1 TWh.

The company’s subsidiary power plants in Southwestern China’s Chongqing posted the fastest growth in wind power output, which were reported at a growth rate of 273.47% on year to 34 GWh in March and 165.34% on year to 53.9 GWh over January-March.

In addition, the company’s power generation project in Canada witnessed the power output in the first quarter drop 2.52% on year to 78.9 GWh, with that in March down 27.76% on year to 21.2 GWh.

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BTG Pactual Said to Plan $1.6 Billion Commodities Arm Spinoff

Grupo BTG Pactual is spinning off its commodity-trading unit and renaming the division Engelhart Commodities Partners in a deal valuing the business at about $1.6 billion, according to a person familiar with the matter.

The bank is planning to announce the deal today, said the person, who asked not to be identified because the information isn’t public. BTG has been considering plans to grant equity in the unit to top managers and traders, two people with knowledge of the situation said in February.

The formal separation of the commodity-trading house, headed by Chief Executive Officer Ricardo Leiman, is designed to retain talent and insulate the unit from the Brazilian bank following the arrest of its founder and former CEO Andre Esteves in November in a corruption investigation. Founded in 2013, the commodity-trading arm has been a bright spot for BTG amid troubles at other operations. The business has grown rapidly in three years to secure a place behind some of the world’s biggest trading houses.

No more "free" Saudi money for Egypt -Saudi businessman

Saudi Arabia's financial support for strategic ally Egypt will no longer involve "free money" and Riyadh will focus on soft loans and a return on investment to help it grapple with low oil prices, a Saudi businessman familiar with the matter said.

"This is a change in strategy. Return on investment is important to Saudi Arabia as it diversifies sources of revenue," the businessman told Reuters on Friday during what has been described as a "historic" visit to Cairo by Saudi King Salman.

Saudi Arabia, the United Arab Emirates and Kuwait showered Egypt with billions of dollars after then-military chief Abdel Fattah al-Sisi toppled President Mohamed Mursi of the Muslim Brotherhood in 2013 after mass protests against his rule.

But low oil prices and differences over regional issues have called into question whether such strong support is sustainable.

Egypt is struggling to revive an economy hit by years of political upheaval triggered by the 2011 uprising that ousted President Hosni Mubarak, as well as an Islamist militant insurgency based in the Sinai Peninsula.

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Oil and Gas

Global LNG markets moving closer to LNG-based indexation: LNG 18

Global LNG markets moving closer to LNG-based indexation: LNG 18

Growing production capacity and rising spot liquidity are accelerating the commoditization of the LNG markets, bringing them a step closer to LNG-based price indexation, a panel of experts said Thursday at the LNG 18 Conference, held in Perth, Australia.

The delivered ex-ship (DES) markets in northeast Asia and the emerging free-on-board (FOB) market in the US Gulf Coast are the key spot trading points that could dominate contractual price indexation in the LNG industry beyond 2020, panelists said.

Chaired by Cheniere's Andrew Walker and independent consultant David Ledesma, the panel was formed by Andree Stracke, Chief Commercial Officer with RWE Supply and Trading; Elizabeth Spomer, President and CEO with Jordan Cove LNG; Hiroki Sato, Vice President with Jera's Fuel Procurement Department; and Jonty Shepard, Chief Operating Officer for BP's Global LNG.

"We will have a clear Asian market index and actually we have it today; we have the [Platts] JKM," said Stracke. "Nobody believes in it but everybody is opening the papers in the morning to see where the JKM is. That is a good sign, that there is something behind, and I am sure we will develop this one."

"In the coal market, we have created markets where traders trade a product with great liquidity without any government support, and that is a very good proxy for the JKM or other Asian indexes, but it is really up to us, traders, producers and buyers, to be active in these markets," he added.

"With the spot volumes coming into Asia and being available in the market, I really believe we will see a much stronger spot market in the entire world, with very similar price levels across the oceans, and this is something that we are already seeing today."

Another LNG-based price indexation is likely to emerge in the US Gulf Coast, with plenty of potential FOB liquidity to come online, a wide range of active market participants, and no significant price difference among the exporting projects, panelists said.

"It is a very diverse market that could form the basis of a reliable index," said Shepard. "You can have a US LNG price index in the same way we have Brent crude, and a lot of the world's oil is priced against Brent crude."

For Jera's Sato, the establishment of a regional gas hub in Asia is the ultimate goal, as it would provide the flexibility, transparency and liquidity that the Asian and global markets need.

"The JKM spot price, or the cocktail of several kinds of indexes, for me are a transition towards the final goal of introducing a hub index," Sato said, adding that the location of that hub -- whether in Japan, China or Singapore -- is less relevant.

"Nowadays, Japanese buyers have a keen interest in the Henry Hub," which is an improvement from oil indexation, Sato explained. "The price of a product should be determined at a crossing point between the supply line and the demand line [of that product]."

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Halliburton and Baker Hughes are in talks to sell $7 billion in assets to private equity shop Carlyle Group LP, according to a report in the Wall Street Journal.

The two Houston companies have sought to overcome antitrust concerns over their potential $35 billion merger by shopping overlapping assets to competitors such as General Electric Co. and, briefly, Weatherford International. The report indicates a widening of the market for the businesses owned by Halliburton and Baker Hughes, which have faced strong opposition from antitrust regulators over their plan to combine.

The Journal, citing sources familiar with the matter, said Halliburton and General Electric couldn’t agree on a price, though it remains in the running to buy the businesses. Regulators were in part concerned that the businesses Halliburton shed wouldn’t survive on their own or as part of a smaller competitor. In addition, low oil prices have strained the oil services industry, limiting the pool of buyers willing to shell out for new ventures.

A sale to a private equity group such as Carlyle Group could address some of these concerns, the Journal reported, though it’s not clear the talks could result in a sale or regulators would bless the divestment.

As part of the merger agreement signed in November 2014, Halliburton agreed to sell assets that generated as much as $7.5 billion in 2013 revenue, but that failed satisfy the Justice Department. Bill Baer, assistant attorney general for the antitrust division, called the deal “unfixable” in announcing the recent lawsuit. “I’ve seen a lot of problematic mergers in my time, but I’ve never seen one that poses so many antitrust problems in so many markets,” he said.

Both Halliburton and Baker Hughes have said they intend to fight to complete the merger. Halliburton has said in the past it was in talks with multiple buyers for its assets.

China March crude runs down 0.2 pct on year - stats bureau

China's March refinery throughput fell 0.2 percent compared with the same period a year earlier to 44.91 million tonnes, or 10.58 million barrels per day (bpd), data from the National Bureau of Statistics showed on Friday.

The daily run rate in March was largely unchanged from the 10.59 million bpd recorded in the first two months this year.

China's crude oil output fell 3.9 percent on year to 17.37 million tonnes, the bureau said.

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Iran's Crude Exports Surge With Days to Go Before Freeze Talks

Iran’s crude shipments have risen by more than 600,000 barrels a day this month, adding to the pressure facing producer nations as they prepare to meet in Doha to discuss freezing output to prop up oil prices.

Tankers carrying about 28.8 million barrels of crude, or more than 2 million a day, left the Persian Gulf country’s ports in the first 14 days of April, according to tanker-tracking data compiled by Bloomberg. That compares with a rate of about 1.45 million barrels a day in March.

Iran was freed from wide-ranging sanctions in January, allowing it to add barrels to an already oversupplied market. Saudi Arabia, Russia and more than a dozen other producers are gathering in Doha on April 17 to discuss a plan to cap output at January levels. Saudi Deputy Crown Prince Mohammed bin Salman has said his country will only limit its supply if Iran does likewise.

China will be the biggest recipient of Iranian crude loaded so far this month, while flows to Japan are resuming after halting in March, the tracking data show.

The resurgence in Iranian shipments comes after deliveries from other members of the Organization of Petroleum Exporting Countries dropped last month amid supply disruptions. Nigeria and Iraq saw a combined decline of 90,000 barrels a day, according to the International Energy Agency.

The Iranian volumes highlight that a rebalancing of the market will have to come primarily from countries outside OPEC, provided that crude prices don’t rise too far, said Ole Hansen, head of commodity strategy at Saxo Bank A/S. If Iran “can keep up sales of that magnitude during the coming months when supply disruptions from northern Iraq and Nigeria begin to fade, we may have to look a bit further out for that rebalancing,” he said.

The price of benchmark Brent crude has rebounded by more than 35 percent since mid-February when Saudi Arabia and Russia, the world’s two biggest oil producers, first signaled their willingness to cooperate on freezing output.

The IEA said Thursday it expects the global oil surplus to almost disappear in the second half of this year, with the glut dwindling to 200,000 barrels a day from 1.5 million in the first six months.

Russia seeking strategic investor to buy Rosneft stake -Putin

President Vladimir Putin said on Thursday the Russian government was searching for a strategic investor to buy a 19 percent stake in global top oil producer Rosneft as part of a privatisation plan.

"We will be searching for a strategic partner who understands and knows that one should not be greedy while buying, let's say, 19 percent of shares in Rosneft," Putin told reporters after his annual televised phone-in.

"That (partner) should not pay attention to the current share price but should look into the future," he added. "If we find such a partner ... then we will take this step."

State-controlled Rosneft, in which BP owns 19.75 percent, is on a Russian government list of companies slated for privatisation in 2016 in order to prevent the state budget deficit from ballooning.

Russian Economy Minister Alexei Ulyukayev said on Wednesday legal advisers had been chosen for Rosneft's privatisation.

Pacific Exploration & Production provides restructuring update

Pacific Exploration & Production Corp. today provided an update in respect of its efforts to formulate a comprehensive financial restructuring that will reduce debt, improve liquidity, and best position the Company to navigate the current oil price environment.

The Company has engaged in an extensive bid solicitation process over the last few months, which process involved the active participation of (i) an ad hoc committee of noteholders (the 'Ad Hoc Committee') representing over 50% of the aggregate principal amount of the Company's senior unsecured notes; and (ii) the Company's lenders under its credit facilities (the 'Bank Lenders'). As previously announced, a number of proposals were received from third parties. As part of this process, bidders were permitted to disclose their offers to, and negotiate directly with, the Ad Hoc Committee and the Bank Lenders.

Following this process, the Board of Directors of the Company, acting upon a recommendation of the Independent Committee of the Board, has resolved to negotiate a consensual restructuring transaction involving The Catalyst Capital Group Inc. ('Catalyst') and the Company's creditors. The Company, the Ad Hoc Committee, the Bank Lenders and Catalyst continue to be engaged in direct negotiations in an effort to finalize the terms of such restructuring as soon as possible. There can be no assurance that the parties will reach an agreement with respect to such a restructuring or as to the terms of any restructuring.

The Company's operations continue as normal and without disruption. The Company has remained, and intends to remain, current with its suppliers, trade partners and contractors.

The Company and its creditors remain committed to finding the best alternative for the long-term interests of the Company, its approximately 2,400 employees and more than 3,000 contract workers, suppliers, customers and other stakeholders. The Company intends to advise the market by further news release immediately following the execution of any definitive documentation, which release shall include the terms of such restructuring.

Gulf Keystone Delays Bond Payments as Oil Drop Squeezes Finances

Gulf Keystone Petroleum Ltd. will delay about $26 million of bond payments due next week as low oil prices and disruptions in Iraq press its finances.

The company intends to use grace periods for payments on convertible bonds and guaranteed notes due on April 18, it said in a statement on Thursday. Shares of the London-based oil explorer tumbled as much as 36 percent to record-low 4.5 pence.

Gulf Keystone, which operates in the Kurdish region of northern Iraq, also intends to hold talks about fundraising and debt obligations after oil prices plunged about 60 percent in two years. Financial difficulties have been compounded by previously erratic export payments from the Kurdistan Regional Government.

“We are working to achieve the best possible way to restructure our balance sheet,” Gulf Keystone’s Chief Executive Officer Jon Ferrier said in the statement. “Addressing our funding needs will ensure the company’s longer-term future.”

The Shaikan wells in Kurdistan, operated by Gulf Keystone and MOL Hungarian Oil & Gas Plc, need $71 million of investment to maintain current production levels, according to the statement. Spending of $88 million is required to raise production to 55,000 barrels of oil a day.

Payments on $325 million of October 2017 convertible notes can be delayed until May 2, without risk of default. Those on $250 million of guaranteed notes due April 2017 can be postponed until May 3. The convertible notes are quoted at 13 cents on the dollar, while the guaranteed notes are at 49 cents, according to data compiled by Bloomberg.

Bondholders including GLG Partners, Sothic Capital Management and Taconic Capital Advisors have hired Houlihan Lokey Inc. to advise them on the potential debt restructuring, people familiar with the matter said in February.

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Qatar's Oil-Freeze Letter to Norway Reveals Doha Deal Logic

The preliminary agreement by Russia, Saudi Arabia, Venezuela and Qatar to freeze output has already put a floor under crude prices and a deal this weekend to include other producers would extend the recovery, according to Qatar’s Energy Ministry.

Analysts and traders have puzzled over exactly why oil producers have devoted so much diplomatic energy to the meeting in Doha on April 17, when the consensus is that the freeze would have little immediate impact on crude production. The letter -- an invitation to the Doha meeting that Norway declined -- gives some answers.

Qatar, which is hosting talks between at least 15 countries to finalize the accord, told Norway’s Ministry of Petroleum and Energy that the plan to cap output at January levels has already “changed the sentiment of the oil market,” according to a letter from Energy Minister Mohammed Al Sada obtained by Bloomberg through a freedom-of-information request. If more producers like Norway join in, it will temper the global oil surplus and “build up on this” price recovery, Qatar reasoned.

Oil prices, which sank to 12-year lows in January amid a global surplus, have climbed more than 30 percent in the past two months amid speculation producers would make the first significant attempt at coordinating oil output between the Organization of Petroleum Exporting Countries and producers outside the group in 15 years. Oil market watchers see a 50-50 chance that producers will strike a deal, but either way they don’t anticipate any impact on crude supply because most of the countries are already pumping flat out.

Price Floor

Talks on capping supply have “triggered a broad and intensive dialog between all oil producers out of the conviction that current oil prices are untenable,” Qatar wrote. “It has put a floor under the oil price and it is proposed to build up on this, by expanding the production freeze to more producers, thereby reducing the extent of the global oversupply and help accelerate the market balance.”

Delegates from OPEC and other oil-producing countries have started arriving in Doha, Qatar’s Energy Ministry said in a separate statement on Thursday, noting a “positive feeling” ahead of the meeting.

While the initiative is supporting prices, any agreement that only limits supply rather than implements output cuts will do little to tackle the global glut, the International Energy Agency said on Thursday.

Norway won’t attend the Doha talks, its Petroleum and Energy Ministry said by e-mail on April 12. Other non-OPEC producers such as Oman, Azerbaijan and Colombia have said they will attend. Several countries planning to boost production this year, notably Iran and Brazil, have said they won’t join the freeze.

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Global diesel demand crumbling, warns IEA

European demand for diesel is expected to have fallen in the first three months of 2016 for the first quarterly decline in nearly two years, the International Energy Agency reported on Thursday, the latest sign of distress in the fuel market.

Europe, where roughly half of cars are fuelled by diesel, joins the United States, China and Japan which saw demand contract for a second consecutive quarter in January-March, according to the IEA.

"Global gasoil demand crumbles," the Western energy watchdog said in its benchmark monthly report. Gasoil includes several different grades of fuel but diesel is the most important.

"The end of gasoil demand growth is not yet upon us, as modest gains are forecast towards the end of the year as the underlying industrial situation improves worldwide," particularly in the United States and India, it said.

Chinese demand for diesel slowed in recent years as the world's second-biggest economy shifted away from heavy manufacturing to be more consumer-focused. In the United States and Japan the weakening demand was linked to slower manufacturing and industrial activity and a mild winter in North America.

Prior to 2016, "the European gasoil consumer demonstrated stolid resistance, a resolve that cracked in Q1 2016," when demand declined by 75,000 barrels per day compared to a year earlier, it said.

The declines were led by France and Germany, which saw diesel consumption drop by 50,000 and 20,000 bpd respectively from a year earlier.

The IEA trimmed slightly its forecast for growth in global oil demand this year to 1.2 million bpd, for total annual demand of 95.9 million bpd.

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Energy XXI to file for bankruptcy as soon as Thursday

Energy XXI to file for bankruptcy as soon as Thursday

Oil and natural gas producer Energy XXI Ltd will prepare for bankruptcy protection as soon as a grace period for missed interest payments expires on Thursday, citing people with knowledge of the matter.

The Houston-based company previously missed two interest payments on a total of $1.6 billion of debt on March 15, Bloomberg reported. (bloom.bg/1Vq2VB4)

Energy XXI could not be immediately reached for comment.

The company had said on March 9 that it might seek Chapter 11 bankruptcy protection if oil prices remained low and it failed to refinance its debt.

Mexico gives Pemex $4.2 bln shot of liquidity

Mexico's Finance Ministry announced on Wednesday a series of measures to improve Pemex's finances, giving the ailing state-owned giant a $4.2 billion liquidity boost.

That includes a capital injection of 26.5 billion Mexican pesos ($1.5 billion) and a credit facility for a further 47 billion pesos to pay down pension costs this year.

The support also includes tax breaks that will allow Pemex to deduct more of its exploration and production costs.

As a condition of accepting the support, the company must reduce its liabilities by 73.5 billion pesos.

Mexico's oil output has slid for 11 consecutive years, while crude prices have fallen about 70 percent since 2014, both of which have battered public finances.

The federal government was able to support Pemex because of previously announced budget cuts in February, the ministry said in a statement.

Miguel Messmacher, a deputy finance minister, said the Mexican oil company would have less need to tap credit markets after the liquidity injection.

Pemex said it would use some of the extra cash to pay back billions of dollars owed to dozens of suppliers and contractors for last year, many of them small and medium-sized firms fully dependent on its business.

"This is good, because it is comprehensive and it deals with the main issues," said Alexis Milo, an economist at Deutsche Bank in Mexico City. "The reaction of markets will be positive because this is the beginning of the structural changes that markets were expecting."

Pemex has historically provided the federal government with as much as 40 percent of its revenue, but recently that amount has been halved.

A constitutional energy overhaul passed in 2013 at the start of President Enrique Pena Nieto's administration ended Pemex's decades-long monopoly and promises to boost future oil output by luring new private and foreign producers into the country.

Russia Refutes Its Own Rumour, Says Doha Deal Will Have Few Detailed Commitments

Yesterday, Russia said there was a virtual deal assured with Saudi Arabia to "freeze" production (at record levels) that did not require Iran's participation.

And now, it appears the Russians are walking that confident "hope" back. Russia's energy minster just told a briefing that the Doha "freeze" deal would be "loosely-framed with fed detailed commitments."

Rice Energy Floats New Round of Stock, Hopes to Raise $488M

MDN’s lead story today is that Rice Energy has made a $200 million offer to buy the Marcellus/Utica assets from now bankrupt coal company Alpha Natural Resources.

As you know, drillers like Rice (and every other driller on the planet) are currently in a cash crunch. Rice doesn’t have an extra $200M laying around ready to use for such a purchase.

So in addition to the ANR deal announced yesterday, Rice also announced they will float another 29 million shares of common stock hoping to raise an additional $488 million, part of which will go for the ANR acreage purchase.

What happens if Rice doesn’t consummate the ANR acreage deal? They’ll use the money raised from this new stock offering “for general corporate purposes”…

Some analysts suggest the drilling uptick is part of Saudi Arabia's strategy of defending or even increasing its oil market share ("Saudi oil gambit moves to phase two", Bloomberg, April 10).

There have even been suggestions the kingdom is reviving its previously abandoned plan to raise capacity from 12.5 million to 15.0 million barrels per day ("Saudi Arabia is on a drilling binge", Quartz, April 12).

But it is at least as likely the increase in drilling is driven by the need to replace declining output from mature fields and the need to develop new sources of gas for power generation.

TWILIGHT IN THE DESERT

Writing about Saudi Arabia's oil reserves, future production and spare capacity is a professional graveyard for oil analysts.

Ten years ago, respected oil analyst Matthew Simmons wrote an alarming book about the depletion of Saudi oil reserves and its impact on the global economy ("Twilight in the desert", Simmons, 2005).

On the basis of a detailed study of field production records, Simmons argued the Saudis were overstating the remaining recoverable reserves and would struggle to maintain let alone increase their output in future.

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Summary of Weekly Petroleum Data for the Week Ending April 8, 2016

U.S. crude oil refinery inputs averaged over 15.9 million barrels per day during the week ending April 8, 2016, 492,000 barrels per day less than the previous week’s average. Refineries operated at 89.2% of their operable capacity last week. Gasoline production decreased last week, averaging about 9.6 million barrels per day. Distillate fuel production decreased last week, averaging 4.8 million barrels per day.

U.S. crude oil imports averaged over 7.9 million barrels per day last week, up by 686,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.8 million barrels per day, 4.1% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 570,000 barrels per day. Distillate fuel imports averaged 175,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.6 million barrels from the previous week. At 536.5 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 4.2 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 0.5 million barrels last week and are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 2.8 million barrels last week and are above the upper limit of the average range.

Total commercial petroleum inventories increased by 6.9 million barrels last week. Total products supplied over the last four-week period averaged 19.7 million barrels per day, up by 3.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.4 million barrels per day, up by 5.7% from the same period last year. Distillate fuel product supplied averaged about 3.7 million barrels per day over the last four weeks, down by 7.1% from the same period last year. Jet fuel product supplied remained unchanged compared to the same four-week period last year.

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US oil production dips below 9 mln bd

Bakken has Lowest Average Drilling and Completion Costs in the Country

The Bakken has the lowest average drilling and completion costs in the country, according to a new study conducted for the U.S. Energy Information Administration.

In 2012, costs were at their highest, but the downturn in oil production in North Dakota has contributed to lower prices.

The study compared the Bakken with four other oil producing areas including Texas and New Mexico.

Although Bakken wells are deeper, drilling in recent years has become more efficient.

Two miles down and two miles out is how far a Bakken rig drills into the ground. That's not cheap to do, but the price has decreased.

"We have certainly seen a fairly significant reduction in operating costs for the Bakken over the past 14 months and a lot of that is due to less competition for the services. We've probably seen 25 to 28 percent reduction," said North Dakota Petroleum Council President, Ron Ness.

According to the study, Bakken wells costs were $7.1 million in 2014, but are estimated to drop to $5.9 million. This is approximately a half a million dollars to a $1 million less than other state's oil formations.

"As the efficiency and productivity have gone up in the wells that are being drilled and are being completed of course we moved into the core area, that helps, but even in those core areas you've seen better wells. That looks good going forward," said Ness.

Ness says operating costs in the Bakken are traditionally higher because of the climate and geography.

The Bakken Inflation which used to drive up prices has also been going down, contributing to lower drilling and completion costs.

Ness says once the Dakota Access Pipeline is built, it will be a key product for shipping oil to market and decrease additional costs.

OPEC cuts 2016 oil demand growth forecast, warns of more

OPEC on Wednesday cut its forecast for global oil demand growth in 2016 and warned of further reductions citing concern about Latin America and China, pointing to a larger supply surplus this year.

The Organization of the Petroleum Exporting Countries also said top exporter Saudi Arabia kept output steady in March - a sign Riyadh is serious about a plan to be discussed this weekend to freeze output and support prices - while OPEC supply overall rose only slightly.

World demand will grow by 1.20 million barrels per day (bpd) in 2016, OPEC said in its monthly report, 50,000 bpd less than expected previously.

It also cited the impact of warmer weather and the removal of fuel subsidies in some countries.

OPEC's view contrasts with that of the U.S. Energy Information Administration, which on Tuesday raised its demand forecast slightly.

A third closely watched oil report, from the International Energy Agency, is due on Thursday.

A big slowdown in demand could complicate producers' efforts to bolster prices by freezing output. The plan, to be discussed on Sunday in Doha, has helped oil prices LCOc1 to rally above $41 a barrel from a 12-year low close to $27 hit in January.

OPEC's refusal to cut output in late 2014 helped accelerate a drop in prices, which is slowing the development of relatively expensive rival supply sources such as U.S. shale oil and other projects worldwide.

In its report, OPEC said it expected supply from outside the group to fall by 730,000 bpd this year, more than the 700,000-bpd drop expected previously. But it reiterated that producer efforts to maintain output were making the forecast uncertain.

Despite the slightly larger non-OPEC decline expected, OPEC projects demand for its crude will average 31.46 million bpd in 2016, down 60,000 bpd from last month's forecast.

The 13-member group pumped 32.25 million bpd in March, the report said citing secondary sources, up 15,000 bpd from February.

Saudi Arabia told OPEC it kept output in March steady at 10.22 million bpd. Riyadh in February struck a preliminary deal with fellow OPEC members Venezuela and Qatar, plus non-OPEC Russia, to freeze output.

Iran, which wants to regain market share after the lifting of Western sanctions on Tehran rather than freeze output, told OPEC it raised output by a minor 15,000 bpd to 3.40 million bpd.

The report points to a 790,000-bpd excess supply in 2016 if the group keeps pumping at March's rate, up from 760,000 bpd implied in last month's report.

Attached Files

India's Fuel Demand Rises to Record on Gasoline, Diesel Growth

Fuel use rose to 183.5 million metric tons from 165.5 million tons in the previous period, according to preliminary data on the websiteof the Oil Ministry’s Petroleum Planning & Analysis Cell. Diesel consumption rose 7.5 percent to 74.6 million tons, while gasoline usage rose 14.5 percent to 21.8 million tons.

“Gasoline growth has been unprecedented and has even surpassed our own expectations,” Arun Kumar Sharma, finance director at Indian Oil Corp., India’s biggest fuel retailer, said in New Delhi. “People are preferring gasoline more than diesel as the price difference between the two has narrowed.”

Gasoline is taxed higher than diesel in India, resulting in the former costing more at retail pumps. The differential narrowed to about 25 percent in April from 34 percent in January. India isreplacing China as the world’s oil-demand growth driver as its economy expands faster than any other major country and a growing middle class has more money to spend.

The International Energy Agency estimates India to account for a quarter of global energy demand growth by 2040 as booming manufacturing and a bigger, richer and more-urbanized population will drive fuel growth. It expects the country’s oil demand to reach 10 million barrels a day in the next quarter of a century, marking the fastest growth in the world.

“In addition to the boost from low oil prices, structural and policy-driven changes are underway that have resulted in India’s oil demand ‘taking off’ in a similar way to China’s during the late 1990s,” analysts including Amrita Sen at Energy Aspects Ltd. said in a note. “These changes include a rise in per capita oil consumption, a massive programme of road construction and a push towards increasing the share of manufacturing in GDP.”

Indian Oil, which controls more than half of fuel sales in the country, expects gasoline sales this fiscal to climb 11 percent and diesel by about 3 percent, Sharma said.

Attached Files

Russia Said to Hire U.S. Lawyers for Rosneft Sale Amid Sanctions

Russia has picked a top American legal firm to advise it on how to conduct the sale of some $7.5 billion of shares in the country’s biggest oil producer, Rosneft OJSC, which is under U.S. and European sanctions, two people with knowledge of the matter said.

While the restrictions that cover Rosneft don’t prohibit equity investment in the company, the U.S. and Europe have frowned on western banks participating in Russian offerings, so far blocking a Russian Eurobond sale after warning firms in February about the risks of working on the transaction.

This time, Russia has chosen New York-headquartered White & Case LLP, which has a long-term presence in Moscow, to try to find a way to navigate the sanctions-related problem, said one of the two people, who spoke on condition of anonymity because the decision hasn’t been made public. White & Case isn’t in violation of any sanctions laws by advising Rosneft, but it will be challenging for the firm to find a way to get the deal done, according to Gary Hufbauer, a sanctions specialist at the Peterson Institute for International Economics in Washington, who said he didn’t expect any major western banks to take the risk of organizing the share sale.

Along with Rosneft, Russia hopes to sell a large stake in oil producer Bashneft PJSC as soon as this year to help shore up public finances hobbled by the collapse in oil prices over the past two years. A funding crunch and the longest economic downturn in a decade and a half are adding urgency to the need to bolster the country’s coffers. The Russian government has said it’s looking for an investment bank to manage the Rosneft sale.

U.S. and European governments warned western banks earlier this year about the reputational risks of working with Russia, where individuals and firms have been hit with a series of measures in response to President Vladimir Putin’s annexation of Crimea and destabilization of eastern Ukraine. Those warnings have so farstymied Russia’s planned $3 billion sovereign Eurobond issue, leaving the government in Moscow searching for other ways to raise cash. The U.S. and European Union sanctions have virtually closed sources of long-term, external funding for many major Russian companies.

“U.S. sanctions do not prohibit U.S. persons, including law firms, from providing legal advice to the Russian government,” the Treasury Department said in an e-mailed statement. “We have not sanctioned the government of Russia. We would note though that it remains illegal for U.S. persons to facilitate transactions that U.S. persons may not directly engage in.”

Reliance, BG to hand some Indian drilling assets to ONGC-sources

A joint venture led by India's Reliance Industries and BG Group will hand drilling infrastructure from an abandoned Indian gas field to ONGC Ltd , a boost for ONGC's plans to develop a key gas reserve nearby, two company sources said.

Executives from Reliance, BG and India's state-run oil firm ONGC have been at odds for months over the cost of closing the Tapti field off the country's west coast.

But after government mediation, the three signed a deal on Tuesday that will see the equipment handed over without charge, with Reliance and BG saving on dismantling costs.

The sources, with direct knowledge of the matter, declined to be named as they are not authorised to talk to the press.

ONGC plans to invest around 100 billion rupees ($1.5 billion) to develop the giant Daman field, which is next to Tapti. The equipment deal will help the group keep a lid on costs - buying and setting up equipment from scratch could cost up to 40 billion rupees ($600 million), one of the sources said.

The deal will also speed up development by three years.

Daman, now set to produce from 2018, is expected to produce 10 million metric standard cubic metres per day (mmscmd) of gas, or 15 percent of ONGC's current natural gas production.

The Tapti infrastructure includes an offshore platform and a 70-kilometre pipeline connecting the platform to ONGC's gas terminal at Hazira in Gujarat.

Reliance, ONGC and BG, now owned by Royal Dutch Shell , did not immediately comment.

The second source said the companies would continue to talk on other closure costs.

West Texas Intermediate, the U.S. benchmark crude, should reach that threshold by the end of the year or in early 2017, Sheffield said at an industry conference in New York on Tuesday. Oil futures were up 3.5 percent to $41.77 a barrel on the New York Mercantile Exchange at 11:40 a.m. Prices are down about 20 percent in the past year.

The number of active oil rigs in the U.S. as of April 8 declined to the lowest level since 2009, Baker Hughes Inc. data show.

Irving, Texas-based Pioneer expects "a major drop" in U.S. production in the third quarter and is not yet adding more hedges, Sheffield said.

Output from U.S. shale formations will drop to 4.84 million barrels a day in May, the lowest in almost two years, a report Monday from the Energy Information Administration showed. Still, American crude supplies probably rose last week, remaining near the highest level since 1930, a Bloomberg survey showed.

China March crude oil imports off record, Q1 gains 13 pct on year

China's crude oil imports rose nearly 22 percent on a daily basis in March from a year earlier, off a record-high in February, while imports for the first quarter grew over 13 percent from the same period in 2015, official data showed.

Chinese imports have been picking up in recent months due to strong demand from independent refiners and better refining margins. Robust purchases from these so-called "teapot" plants have caused severe port congestion in eastern Shandong province, a hub for the independents.

March imports stood at 32.61 million tonnes, or 7.68 million barrels per day (bpd), easing from a record rate in February of 8 million bpd, according to numbers issued on Wednesday by the General Administration of Chinese Customs C-CNIMP-PRM.

For the first quarter, imports rose 13.4 percent on the year to 91.1 million tonnes, or about 7.31 million bpd. That would be an increase of nearly 800,000 bpd on average during the period.

Independent refineries have been ramping up their crude processing rates and boosting fuel sales as low global oil prices provide higher margins. The jump in their crude runs has even forced many state oil firms to make rare cuts in refinery throughput.

But hefty levels of imports may not last into the second quarter as inventories have swollen.

"China's crude import growth is unlikely to sustain at Q1 levels because demand is seasonally lower in Q2 and there has been some port congestion issues which will slow buying," said Virendra Chauhan of consultancy Energy Aspects.

A senior official with Sinopec's trading unit said on March 31 that China's crude oil imports were expected to rise to 7.5 million bpd in 2016, likely trumping the United States as top importer.

Fuel exports in March rose 25.4 percent over February to 3.75 million tonnes, as China continues to export more diesel and gasoline amid a growing supply surplus and weak domestic demand for diesel fuel from the industrial and construction sectors.

Net fuel exports were 1.30 million tonnes in March.

China has granted refiners additional fuel export quotas of more than 14 million tonnes, bringing the total issued so far this year to more than 35 million tonnes, a trade source said last week.

Earlier on Wednesday, the National Development and Reform Commission said domestic consumption of key transportation fuels gained 7.2 percent on year, with diesel up nearly 3 percent, reversing a decline seen in the first two months of 2016.

Schlumberger to limit Venezuela operations on payment problems

Oilfield services provider Schlumberger Ltd said it would reduce its operations in Venezuela due to payment problems, a further sign of the cash crunch facing the OPEC nation because of weak oil markets.

Venezuelan state oil company PDVSA, the exclusive operator of the country's oilfields, has built up billions of dollars in unpaid bills to service providers as a result of cash-flow problems.

"Schlumberger appreciates the efforts of its main customer in the country to find alternative payment solutions and remains fully committed to supporting the Venezuelan exploration and production industry," the company said in a statement.

"However, Schlumberger is unable to increase its accounts receivable balances beyond their current level."

The company said the reduction will take place through this month, allowing for a safe wind-down of operations.

Schlumberger in 2013 gave PDVSA a $1 billion credit line to allow it to continue delivering services despite the accumulating debts. It took a $49 million loss last year due to Venezuela's currency devaluation and another $472 million in 2014 for the same reason.

PDVSA in a statement said it "categorically denies information reflected in certain international media regarding a supposed reduction in operations by services firm Schlumberger, Ltd."

It added that "additional work required by the corporation will be distributed to other companies that provide similar services," without elaborating.

A slew of major U.S. corporations have taken sizeable writedowns for their Venezuela operations due primarily to a steadily weakening currency.

Schlumberger, which in March forecast a 15 percent drop in first-quarter revenue from the fourth, reaffirmed the $6.5 billion forecast on Tuesday. Houston-based Schlumberger's shares were up 2.3 percent at $75.55 in extended trading.

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Engie, Gazprom agree on long-term gas price revision

French gas and power group Engie and Russia's Gazprom Export have agreed to adapt the price of long-term gas supply contracts to fit market conditions, Engie said in a statement on Tuesday.

Gazprom had said in February that Engie was suing its Gazprom Export unit to revise prices on a natural gas supply contract. Engie filed a suit at the Arbitration Institute of the Stockholm Chamber of Commerce late last year, Gazprom said.

"With this agreement, Engie has de-risked its long-term supply contracts for the next years by adjusting their pricing to market conditions," Engie Executive Vice-President Pierre Chareyre said in a statement.

A source close to Engie said that the gas price, which before had been indexed mainly to oil prices, would now be linked more to market prices for gas, notably the PEG Nord (Point Echange Gaz) in France's northern gas price zone.

He declined to elaborate on the details.

On Monday, Gazprom also said it had reached an agreement with Engie and that the French energy group had halted arbitration proceedings.

Engie said it signed its first gas supply contracts with Russia more than 40 years ago. Engie's supply contracts with Gazprom Export this year represent about 22 percent of the group's long-term supplies in Europe, it added.

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Russia, Saudi Arabia Reach Oil-Freeze Consensus, Interfax Says

Saudi Arabia and Russia have reached an agreement that means the Persian Gulf nation will make a final decision on freezing oil production regardless of whether Iran agrees to join, Interfax reported Tuesday.

The consensus was reached during talks between the two nations on Tuesday, Interfax reported citing an unidentified “informed diplomatic source.”

At least 16 nations including the world’s two largest crude oil producers will gather in Doha on April 17 to discuss freezing output at January levels in order to stabilize an oversupplied oil market. Saudi Arabia has insisted it would only commit to a production cap if Iran follows suit, a proposal that Iran’s oil minister has dismissed as “ridiculous.”

Andurand Capital sees large oil inventory draws from next year

Prominent oil trader Pierre Andurand said on Tuesday he expects global oil stocks will stop growing in the next few months and there will be large inventory draw downs from next year.

Andurand, the managing partner of London-based hedge fund Andurand Capital, said at the FT commodities global summit that he expected oil prices to rise to $60 per barrel later this year and $80 in 2017.

It recorded the liability despite bringing down its debt ratio to 43.8 percent from 45.2 percent a year ago after slashing total debts by 3.5 percent last year.

PetroChina obtained regulatory approval in December to issue no more than 40 billion yuan worth of corporate bonds, according to Xinhua.

The thirst for liquidity came as oil companies reported a weaker year due to nosediving oil price. Brent crude, the benchmark for more than half the world's oil, plunged 48 percent last year.

PetroChina reported a 67 percent slump in net profit to 35.5 billion yuan, marking its worst performance since 1999, according to the company's annual report. The other mainland-listed oil magnet Sinopec reported a 32.1 percent decrease in net profit to 32.2 billion yuan.

Cost management has gained increasing attention, with PetroChina planning a 23 percent, or 155.7 billion yuan, cut on capital expenditure, said the newspaper citing comment from the management.

Oil giants are also eyeing enhanced ownership reform to keep lean, said analysts. PetroChina sold remaining natural gas reserves under its Xinjiang, Southwest, Huabei, Dagang, Liaohe and Changqing subsidiaries to local petroleum administrations for 3.51 billion yuan, in a drive to clarify assets relationship and recover cash flow early, it said in a regulatory filing last November.

The company reported a 26.7 percent decrease in cash flow from operating activities to 261.31 billion yuan and a 25.8 percent slump in cash flow from investment activities.

Pertamina has $2bn M&A war chest

Indonesia's state-owned energy company Pertamina has a budget of up to $2 billion for mergers and acquisitions this year amid efforts to supply Indonesia's growing domestic energy demand.

Pertamina is looking to buy into projects in countries including Iraq, Saudi Arabia and Russia and will also target expansion in border areas to strengthen Indonesia's sovereign claims, including in the South China Sea, its upstream director, Syamsu Alam, told Reuters.

Pertamina plans to increase output through mergers and acquisitions by 14,000 barrels of oil equivalent per day this year, and by 117,000 boepd in 2017, Alam told the news agency.

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Marathon Oil to Divest $950 Million of Non-Core Assets

Marathon Oil Corporation (NYSE:MRO) announced today it has signed agreements for the sale of certain non-core assets for $950 million, bringing the total to approximately $1.3 billion since last year.

In the largest transaction, the Company will divest all of its Wyoming upstream and midstream assets for $870 million, excluding closing adjustments. The upstream properties, comprised primarily of waterflood developments in the Big Horn and Wind River basins, averaged 16,500 barrels of oil equivalent per day in first quarter 2016. The assets sold also include the Red Butte pipeline, a 570-mile pipeline that is the only export line in the area. The effective date of this transaction is Jan. 1, 2016, and closing is expected mid-year 2016.

In separate transactions, Marathon Oil has signed agreements for the sale of its 10 percent working interest in the outside-operated Shenandoah discovery in the Gulf of Mexico, operated natural gas assets in the Piceance basin in Colorado, and certain undeveloped acreage in West Texas for a combined total of approximately $80 million.

"Since August 2015, we have now announced or closed non-core asset sales of approximately $1.3 billion, surpassing our targeted range of $750 million to $1 billion," said Marathon Oil president and CEO Lee Tillman. "Ongoing portfolio management continues to drive the simplification and concentration of our portfolio to lower risk, higher return U.S. resource plays and support our 2016 objective of balance sheet protection."

Kuwait oil and gas workers to go on strike from Sunday -union

Thousands of workers at state-owned oil, gas and petrochemical companies in Kuwait will stage a strike from Sunday in protest at a government plan to cut some of their benefits and wages, the president of the oil and gas union said on Monday.

"The union finds itself obliged to take the difficult decision to escalate with this announcement of a general strike in all sectors (of oil and gas) starting on Sunday, April 17 at 7 a.m. (0400 GMT)," Saif al-Qahtani, head of the Oil and Petrochemical Industries Workers Confederation, told a news conference.

The union did not say how long the strike would last.

Production and exports would not be affected by the strike, a spokesman for Kuwait's national oil company Kuwait Petroleum Corp (KNPC), one of five state-owned companies that will be affected by the strike, said.

"If the strike happens we do have a strategy in place to deal with this kind of action where extra staff will be used to run operations" Khaled Al-Asousi, KNPC's Deputy CEO for Support Services said, adding that some oil facilities might be shut down temporarily.

Workers fear reduced salaries, benefits and layoffs will be part of a planned government overhaul of the payroll system in the public sector.

Strikes are fairly common among public sector workers in Kuwait - one of the world's richest countries per capita - unlike in other Gulf states like the United Arab Emirates, where unions are banned.

Pemex applies brakes at Lakach

Mexican state oil company Pemex has told contractors to stop work on the offshore Lakach gas project in the Gulf of Mexico — potentially its first deep-water development — as it seeks to defer upstream spending.

Kuwait Targets Oil Output at 43-Year High as Freeze Talks Loom

Kuwait Oil Co. will soon offer contracts for offshore rigs and support services to drill its first undersea wells as the Persian Gulf nation tries to boost crude output to the highest level in more than four decades.

Kuwait is targeting production of 3.165 million barrels a day later this year or in 2017, up from a current 3 million barrels a day, Chief Executive Officer Jamal Jaafar said Monday at a conference in Kuwait City. He made his comments a day after fellow OPEC member Iraq reported a record level of production and less than a week before some of the biggest oil-producing nations are to discuss freezing output to reduce a glut and shore up prices.

“We are trying to make use of the low cost of production in Kuwait,” said Jaafar, whose company is the exploration and production arm of national energy group Kuwait Petroleum Corp.

Kuwait and Iraq are among members of the Organization of Petroleum Exporting Countries that plan to meet with other major producers on April 17 in Doha for talks about a freeze. Saudi Arabia, Russia, Venezuela and Qatar agreed in February on a proposal to cap output at January levels, though Iran has refused to participate until it restores production to pre-sanctions levels. Crude prices have tumbled more than 60 percent over the last two years.

Re-Balancing Markets

Oil markets will be oversupplied throughout the first half of this year but will start to re-balance in the third quarter, Jaafar said.

Kuwait Oil is looking at six offshore areas to drill its first undersea wells and plans soon to offer contracts for the work, he said, without specifying dates. Kuwait, OPEC’s fourth-largest member, hasn’t pumped an annual average of more than 3 million barrels a day since 1973, data compiled by Bloomberg show.

Kuwait will also start a project this year with Royal Dutch Shell Plc to capture carbon dioxide at oil fields and re-inject it underground to produce more crude, he said. Kuwait Oil is tackling more difficult crude formations to increase production capacity, and it’s testing the injection of chemicals and polymers at fields in the northern part of the country to enhance recovery.

Crude output in Iraq, OPEC’s second-biggest producer, reached a record 4.55 million barrels a day last month from 4.46 million barrels in February, the country’s state-run Oil Marketing Co. said Sunday in an e-mailed statement.

Production in southern Iraq, where most of the country’s biggest fields lie, will remain unchanged this year amid cuts in investment, Ali Haddad al-Fares, head of the energy committee of the Basra regional council, said Monday in an interview in Kuwait City. Iraq is targeting total output to reach 6 million barrels a day by 2020, with most of the increase to come from the Basra region, he said.

LNG Backers Face Comatose Market as Oil Shows Signs of Life

The most influential executives, investors and traders in the liquefied natural gas market will gather in Perth, Australia, this week for the industry’s biggest conference. While Brent oil has surged about 50 percent since hitting a 12-year low in January amid the worst energy crash in a generation, LNG continues its downward slide.

For crude, two years of spending cuts have throttled output and begun to ease an unprecedented period of oversupply. In the LNG markets, where projects cost billions of dollars and take years to build, a backlog of developments sanctioned when prices were higher are bringing supply online faster than demand can soak it up.

“It looks like we’re entering the down cycle for LNG rather than coming out the other side,” Jeff Brown, president of consulting firm FGE, said by phone from Singapore. “For the spot market in the next several years, it looks like there’s going to be a lot of LNG out there chasing buyers.”

Oil and LNG prices have historically been linked because traditional long-term contracts priced the gas in relation to crude. That correlation held through 2014 and 2015, as prices for both fuels tanked amid a global glut.

The two are now heading in opposite directions. Spot LNG in Singapore slipped to $4.029 per million British thermal units the week of April 4, the lowest since Singapore Exchange Ltd. began assessing it in September 2014 and extending its decline into a fifth month. Brent, meanwhile, recovered from its early-year crash to post its best first quarter in four years. The global oil benchmark fell 1 percent to $41.53 a barrel by 8:09 a.m. London time.

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Chesapeake Energy's borrowing limit maintained at $4 billion

Chesapeake Energy Corp said its borrowing base was reaffirmed at $4 billion, but it had to pledge additional assets as collateral.

Every six months, energy companies negotiate their credit limits with banks, based on the value of their oil and gas reserves.

Chesapeake, the No.2 U.S. natural gas producer, said on Monday that the next review of its borrowing base had been postponed until June 2017.

The company's shares rose more than 6 percent in premarket trading.

Oil prices have dropped more than 60 percent from their peaks in June 2014, hitting the profits of most companies in the industry.

Chesapeake has managed to retain its borrowing limit at a time when most oil and gas producers are bracing for steep cuts to their credit lines.

Just a few weeks into the current round of talks, over a dozen companies have had their loan limits cut by a total of $3.5 billion, or a fifth of available credit, according to data compiled by Reuters. (tmsnrt.rs/1S9304F)

At that rate, $10 billion more of bank credit will disappear as the remaining credit lines of about $50 billion come under scrutiny in talks that stretch into May.

Banks are also relaxing covenants that could have allowed lower classes of lenders to throw borrowers into default and suddenly trigger repayment requirements.

Chesapeake said two of its covenants had been relaxed under the latest agreement.

The company's shares were trading at $4 before the bell.

Up to Friday's close, the stock had lost nearly three-quarters of its value since the beginning of June 2015.

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Oilfield services provider Carbo Ceramics' executives to take pay cut

Oilfield services provider Carbo Ceramics Inc said its executives would take a 10-30 percent cut in their monthly cash compensation as the company looks to slash costs.

The company, which makes ceramic balls used to keep the cracks in fractured shale rock open, said on Monday the cut would be through voluntary participation by executives in furloughs, unpaid time off and leaves.

Carbo Ceramics, however, said it had not amended the employment contracts of its chief executive and other executives.

A Reuters analysis of filings through mid-March showed that a number of companies had changed their payout plans for executives amid the collapse in oil prices.

Baker Hughes 'faces police probe'

Police have reportedly been called in to investigate a fatal incident at a Baker Hughes facility in Norway last year after the country’s Labour Inspectorate ruled there was a breach of work environment regulations.

The state-controlled oil company has narrowed Gazprom’s lead from more than $250 billion in 2008, as it expanded through the acquisitions of assets from Yukos Oil Co., which the government sold at forced auctions over tax claims, and BP Plc’s joint venture in Russia. Gazprom has faced rising competition in the domestic gas market, including from Rosneft, and the lowest prices in more than a decade in Europe.

“Rosneft is growing its free cash flow and should do better in a stronger oil price environment,” Ildar Davletshin, an energy analyst at Renaissance Capital, said by e-mail. “Gazprom’s free cash flow is on the way down and unlikely to reverse soon.”

Gazprom still dwarfs Rosneft by output. Its oil and natural gas output are equivalent to about 8 million barrels a day, while Rosneft pumps roughly 5 million barrels a day.

National Oilwell slashes dividend amid oil slump

National Oilwell Varco Inc, the largest U.S. oilfield equipment maker, said it would cut its quarterly dividend to 5 cents per share from 46 cents, as it struggles to cope with a prolonged slump in oil prices.

The company cut its quarterly dividend by 89 percent, saying that market conditions continued to deteriorate through the first quarter.

A prolonged oil price slump, of more than 60 percent since its peak in 2014, has forced many companies to slash or scrap dividends, lay off employees and cut executive pay.

The dividend cut was expected to improve future net cash flow by about $615 million per year, Chief Executive Clay Williams said in a statement on Monday.

The company forecast a 20 percent fall in first-quarter revenue from the fourth quarter. This would imply a first-quarter revenue of about $2.16 billion, based on fourth-quarter revenue of $2.70 billion.

National Oilwell, which laid off more than 21 percent of its employees in 2015, said in February that the oil price slump would weigh on its order book for the "foreseeable future" as customers clamp down on spending.

US Oil Production and Credit.

Tokyo Gas, Kansai Electric in LNG procurement partnership

Japan's biggest city gas supplier Tokyo Gas and second-biggest power utility Kansai Electric Power Co said on Monday they agreed on a partnership on liquefied natural gas (LNG) purchases and a technology tie-up on gas-fired power plants.

Both utilities are among the biggest LNG buyers in Japan, which takes in about a third of global shipments of the fuel.

U.S. oil rig count drops by eight, Baker Hughes says

U.S. oil rig count drops by eight, Baker Hughes says

The number of rigs drilling for oil in the United States fell by eight this past week, Baker Hughes reported Friday, bringing the nation’s overall rig count to its lowest point in its multi-decade history, to 443.

The domestic fleet of drilling rigs probing U.S. land for oil – at 354 unit on Friday – has fallen by more than three quarters since the downturn began in late 2014. Only 89 rigs seeking natural gas remain. In Texas, the oil-and-gas rig count has dropped from a peak of 905 a year and a half ago to 197 this week. Each rig employs dozens of oil-patch workers.

U.S. crude in early trading Friday jumped $2.41 to $39.67 a barrel on the New York Mercantile Exchange. Global benchmark Brent climbed $41.81 a barrel on the ICE Futures Europe.

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Iraq Boosts Oil Production to Record Before Talks to Cap Output

Iraq increased crude output to a record level in March, ahead of a meeting in Qatar of OPEC members and other producers on capping production to curb a global glut.

Crude output in OPEC’s second-biggest producer rose to 4.55 million barrels a day last month from 4.46 million barrels in February, according to the state-run Oil Marketing Co. Exports increased to 3.81 million barrels a day in March from 3.23 million the previous month, the company, known as Somo, said in an e-mailed statement.

The Organization of Petroleum Exporting Countries and other major producers such as Russia are set to meet in the Qatari capital Doha on April 17 to decide on a possible freeze in crude output in an attempt to shore up prices. Iraq supports an agreement reached in February between Saudi Arabia, Russia, Venezuela and Qatar to cap output at January levels, Iraqi Oil Ministry Spokesman Asim Jihad said on March 23, without confirming if the country agrees to freeze its own production.

Iraq is boosting output and exports after decades of economic sanctions and war. The country pumped a then-record 4.43 million barrels a day in January, the International Energy Agency said in a report published last month. Iraq holds the world’s fifth-biggest crude oil reserves.

Oil prices have dropped more than 60 percent in the past two years and are squeezing revenue for the government, which is waging a costly campaign against Islamic State militants who have seized northern sections of the country.

Iraq’s Oil Minister Adel Abdul Mahdi suspended his participation in the cabinet last month, citing disarray in government ministries. Nizar Saleem Numan, who was nominated to replace him, withdrew his candidacy earlier this month, citing a lack of agreement over the make-up of the proposed cabinet.

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TransCanada Restarts Keystone Oil Pipeline After Leak

The Canadian company said it has completed repairs to the leak, which caused a spill of about 400 barrels, or 16,800 gallons near the company’s Freeman pump station in Hutchinson County. It said it would initially operate the pipeline at reduced pressure to make sure it is working normally, with aerial patrols and visual inspections of the leak site.

“Clean up and land restoration has already started and will continue over the coming days,” the company said regarding the spill.

The 3,000-mile-long Keystone pipeline carries light and heavy crude oil from Hardisty, Alberta to a refinery and oil terminal in Illinois, as well as storage facilities at Cushing, Okla. and refineries in Port Arthur, Texas.

Phillips 66 said last week that it has been forced to run its 306,000-barrel-a-day refinery in Wood River, Illinois at a slower pace while Keystone was closed.

Petrobras February output falls 5.2 pct to 2-year low

Brazil's Petroleo Brasileiro SA said on Friday that output dropped 5.2 percent in February to 2.65 million barrels of oil and equivalent natural gas a day from a year earlier.

Petrobras, as the state-run company is known, said the lowest February output in two years was largely due to stoppages for maintenance work.

Considering only output in Brazil, Petrobras said it produced 2.48 million barrels of oil and equivalent natural gas a day in August, down from its local output of 2.69 million barrels in August.

The company, which is trying to overcome a massive corruption scandal, said crude oil production in Brazil was 2 million barrels per day in February, level with the previous month, which had the lowest output since May 2014.

Oil production fell despite advances in output in the subsalt polygon off the Brazilian coast where Petrobras and its partners produced 874,000 barrels per day, a 6.2 percent increase from January.

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Nigeria May Sell 40% of Future State Oil Company Within 10 Years

Nigeria’s government may sell 40 percent of a new national oil company within 10 years of its creation, according to a draft law.

At least 10 percent of the company will be divested within five first years, according to the draft bill handed to reporters in Parliament in the capital, Abuja. Nigeria’s Petroleum Ministry will hold 51 percent while the Bureau of Public Enterprise is to hold the remaining 49 percent for government.

Last month, President Muhammadu Buhari approved a restructuring of the Nigerian National Petroleum Corp. into five units in a bid to reform the behemoth and make it profitable again. The business units comprising upstream, downstream, gas and power, refinery and a ventures group will each be headed by a chief executive officer and will have at least two other subsidiaries.

The NNPC lost 267 billion naira ($1.34 billion) last year after being dragged down by its refining business and as the finances of Africa’s top crude producer has been battered by a drop in oil prices in the past 12 months. Buhari has made it a priority to restructure the company and rid it of the corruption that multiple probes have said is rampant.

Inpex: Ichthys LNG moves ahead, new civil works contracts awarded

Construction works on the Ichthys LNG’s onshore facilities are progressing as the project operator Inpex informed in its monthly update on Thursday.

The Japanese company revealed that two new work packages at the project’s construction site at Bladin Point near Darwin have been awarded to Laing O’Rourke Australia and Territoria Civil.

The Australian unit of the UK-based construction company Laing O’Rourke, secured an A$200 million package to deliver a range of miscellaneous civil finishing works including concrete pavements, hand railings and foundation works.

Territoria Civil won an A$80 million package to deliver roads and paving works including asphalt laying and permanent traffic signage.

Inpex also noted that the installation of the 40,000 tons of mooring chains that will keep the Ichthys LNG’s offshore processing facilities in place is scheduled for completion by the end of May 2016.

The central processing facility and the floating, production, storage and offloading facility that had its flare tower installed in February will be held in place by 77 kilometers of mooring chains.

During February, the installation of the project’s 140 kilometers of rigid subsea flowlines has been completed. Also in February, the project completed the reinforced concrete roofs for both of its onshore LNG storage tanks at the facility.

The project was initially scheduled for start-up at the end of this year, however, in September last year, Inpex delayed the production start-up of its $34 billion project for the third quarter of 2017, raising the production 6 percent from 8.4 mtpa to 8.9 mtpa of LNG.

The Ichthys project is a joint venture between Inpex, major partner Total, CPC Corporation and the Australian subsidiaries of Tokyo Gas, Osaka Gas, Kansai Electric, Chubu Electric Power and Toho Gas.

Worst yet to come for diesel, casting refinery profits in doubt

Oil refineries are shifting into high gear to produce as much gasoline as possible for the world's fuel-hungry drivers - kicking the problem of a worsening diesel glut further down the road.

The "margin" or profit derived from refining crude into diesel has plunged in Europe, hitting multi-year lows this week as demand for the fuel - used heavily for heating in the Northern Hemisphere - wilts towards the end of winter.

But gasoline buying and margins are surging as U.S. drivers rev up for the summer and consumers in China and India also hit the road in record numbers. Bank of America Merrill Lynch said it now expects global gasoline demand growth of 500,000 barrels per day (bpd) - some 65 percent above the 10-year average.

Traders and analysts said such lopsided demand could depress diesel profits for at least another year, as refineries running for gasoline are configured in such a way that they cannot produce it without pumping out thousands of barrels of middle distillates that the world is not consuming.

"The worst is definitely yet to come. The diesel crack can still move lower ... to negative, even," said JBC analyst Michael Dei-Michei, referring to the gap between the price of diesel and the cost of the crude needed to produce it - a measure of profitability. "That's not out of the question."

Gasoline demand over the past year and a half defied all expectations as drivers spurred by cheap oil hit the road in huge numbers and bought more gas-guzzling SUVs.

The development was a lifeline to oil producers, encouraging refineries around the world to run at full steam.

But refiners, who for years struggled to produce enough diesel to power industrial growth worldwide and who bet on flat to falling gasoline demand due to more fuel-efficient cars, spent years and invested hundreds of millions to maximize diesel.

Saudi Aramco and its partners recently opened massive new refineries in the Middle East that were built to produce more than 60 percent middle distillates, while companiesincluding ExxonMobil, Total, Galp and Repsol invested in European refineries to boost diesel.

But now that they are up and running, the diesel outlets, such as oil drilling, railroads, construction and other heavy industries, are languishing. Figures in myriad countries, including China, Brazil and the United States, show diesel consumption flatlining or falling.

A warm winter across the northern hemisphere kept households from burning heating oil at the usual pace, meaning stocks of distillates did not draw down as much as they normally would over the winter and the refinery maintenance season.

"There's nothing that can give a (diesel) demand boost until we have a cold winter," Dei-Michei said.

A string of analysts have said economic run cuts – when refineries slow production to avoid producing unwanted or unprofitable fuel – will come to the rescue.

But a variety of trading and refinery sources said that if gasoline demand grows at expected levels, the profits for selling it will keep refineries from slowing – placing even more diesel into glutted storage tanks and forcing margins lower.

"It's a pretty bitter pill to swallow for those who invested (in diesel) to improve their margin," a European refinery source said.

Refineries have been working for months to cut diesel production – doing everything from changing their crude slate to shutting upgrading units such as hydrocrackers. But sources said these efforts can sustainably cut only a maximum of around 2 percent for most refineries.

"The European refining system is too exposed to diesel," one oil trader said. "If 65 percent of your products are negative, you'd need $35 gasoline cracks" to run on negative diesel margins.

Still, Dei-Michei and others said a maintenance-season diesel stock draw, which dried out thousands of barrels from floating storage as well as on-land tanks, along with the construction of new tank space, means there is room in storage despite brimming stocks at hubs in Europe, Asia and Singapore.

But the flood into storage could blunt diesel profits until as far as 2018.

"The last time diesel stocks were high at the end of 2009, we entered a period when diesel demand grew more than gasoline, and yet it still took years to run through those excess diesel inventories," said Andrew Reed, analyst with ESAI.

Attached Files

Alternative Energy

SunEdison in talks to sell Indian solar stakes to Fortum: sources

SunEdison Inc is in talks to sell minority stakes in its Indian solar projects to Finland's Fortum, two sources said, as the U.S. firm seeks funds to finish proposed plants in India amid concerns about its finances at home.

Heavily indebted SunEdison, once the fastest growing renewable energy developer in the United States, could soon file for bankruptcy protection, according to one of its publicly listed units.

Fortum, a state-controlled utility, said on Tuesday it planned to invest 200-400 million euros ($225-$450 million) in solar projects in India and would look at developing large new projects or consider partnerships.

Fortum is interested in taking stakes in SunEdison's projects, including a proposed 500-megawatt (MW) plant in Andhra Pradesh state it won last November after an aggressive bid, said the two sources with knowledge of the matter.

Fortum spokeswoman Sophie Jolly declined to comment on any talks with SunEdison, but said it was "normal that there would be rumours and speculation around our interest in any solar, and particularly now in India".

SunEdison said in an email it was in discussions for equity partners in its projects but declined to name any investor.

The company has around 600 MW of projects constructed and financed in India, with plans to build another 1,700 MW in the coming year, according to one of the sources.

SunEdison has also drawn preliminary interest from Indian billionaire Gautam Adani's fast-expanding Adani Group, though a person close to Adani said the low tariff agreed for the Andhra plant would make any deal hard for Indian firms.

Goldman Sachs-backed Indian renewable energy company, ReNew Power, is also in talks with SunEdison for the assets, the Hindu newspaper reported on Thursday. One of the sources also reported the talks, but ReNew declined immediate comment.

Solar power sets new British record by beating coal for a day

The sun provided British homes and businesses with more power than coal-fired power stations for 24 hours last weekend.

While solar power has previously beaten coal for electricity generation over a few hours in the UK, Saturday was the first time this happened for a full day.

Analysts said the symbolic milestone showed how dramatic coal’s decline had been due to carbon taxes, as solar had “exploded” across the UK in recent years.

National Grid data gathered by climate analysts Carbon Brief showed that 29 gigawatt hours (GWh) of power was generated on Saturday by solar, or 4% of national demand that day, versus 21GWh from coal-fired power stations.

“This first for solar reflects the major shifts going on in the electricity system,” said Carbon Brief in its analysis. “Last weekend’s solar breakthrough could not have happened without the increase in solar capacity. However, an ongoing collapse in coal generation was the more immediate cause.”

GE Global Research excited about potential of new turbine

GE engineers have developed a turbine that is no bigger than the size of an average desk yet can produce enough power for an average town.

Designed by GE Global Research, the turbine uses superheated carbon dioxide and could be a breakthrough technology in terms of cleaner, more efficient power generation into the future.

Doug Hofer, lead engineer on the project, said, “The world is seeking cleaner and more efficient ways to generate power. The concepts we are exploring with this machine are helping us address both.”

MIT Tech Review reports the turbine is driven by 'supercritical carbon dioxide', which is kept under high pressure at temperatures of 700˚C. Under these conditions, the CO2 enters a physical state between a gas and liquid, enabling the turbine to harness its energy for super-efficient power generation, with turbines transferring 50 per cent of the heat into power.

Waste heat produced from other power generation methods, such as nuclear power stations or solar could be used to generate molten salt to heat carbon dioxide gas to a supercriticial liquid for the new turbines - which may be much quicker than heating water for steam.

The design of the turbine would enable up to 10 MW of energy to be produced, but it could be scaled up to 500 MW, enough to power a city. It could also help energy firms take waste gas and repurpose it for efficient and cleaner energy production.

GE confirmed the power cycle is a closed loop which circulates the CO2 continuously around the cycle, and that there are no waste products from the system when used with solar energy.

The team is reportedly working with US government’s Advanced Research Projects Agency-Energy and the US Department of Energy.

The technology is still in its early phase, but researchers hope to put the turbine through its paces later this year, with a view to industrial scale roll-out.

'With energy demand expected to rise by 50 percent over the next two decades, we can't afford to wait for new, cleaner energy solutions to power the planet,' explained Hofer. 'We have to innovate now and make energy generation as efficient as possible.”

SunEdison financial woes also threaten yieldcos that hold assets

The prospect of a near-term bankruptcy for solar giant SunEdison Inc also threatens the separate companies it created to hold renewable energy assets - the so-called "yieldcos."

The companies - TerraForm Power Inc and TerraForm Global Inc - will likely avoid bankruptcy but may not escape unscathed, analysts and restructuring experts said.

A judge could rule that the yieldcos must be included in a SunEdison bankruptcy, analysts said. The companies could also be sold.

Either way, a potential SunEdison bankruptcy filing would be unpredictable for the yieldcos because all three companies are so intertwined.

The filing could come as soon as this week as SunEdison reaches the end of a grace period set by lenders stemming from its delayed annual report.

TerraForm Global and Power said in a joint statement to Reuters that the companies "do not rely substantially on SunEdison for funding or liquidity" and can support their operations on their own.

A SunEdison spokesman did not immediately respond to requests for comment.

SunEdison controls TerraForm Power and Global by holding the majority of their voting shares. On their own, both companies have stronger financials than their parent.

TerraForm Power, the larger of the two companies, recorded profit of $2.4 million and debt of $2.5 billion at Sept. 30, 2015, according to its most recent quarterly report. TerraForm Global reported a loss of $82.9 million and $1.2 billion in debt the same date.

The companies are valued for the dividends they pay to investors. Their shares closed Tuesday at $9.52 and $2.58, respectively, compared to SunEdison's at 40 cents.

The companies' original relationship with SunEdison gave them call rights - essentially right of first refusal - on projects in the Edison pipeline. But the future of those projects is in jeopardy because of SunEdison's financial problems, which also threatens the yieldcos future revenues.

A SunEdison bankruptcy could further dampen the yieldcos' prospects.

SunEdison has not transferred projects in Uruguay and India to TerraForm Global on time, the yieldco said in public documents. TerraForm Power, focused on domestic markets, may also be at risk of not receiving projects as SunEdison tries to sell off assets in Colorado.

"If the yieldco never receives any additional assets in the future, they're stuck with limited income every month, as the sun shines and wind blows," said Jeffrey Osborne, an analyst at Cowen & Co who covers SunEdison.

A SunEdison bankruptcy could also cause defaults in the credit agreements at the individual projects for TerraForm Global and Power, but the banks are unlikely to call in the debt as long as the projects are performing, said Swami Venkataraman, an analyst at Moody's Investors Service Inc.

The yieldcos also rely on SunEdison to make interest payments for them - longstanding arrangements worth tens of millions of dollars each year. Those agreements could be nixed in bankruptcy, according to a public filing, leaving both of them to fend for themselves.

Both companies, which have no employees of their own, also rely on SunEdison for back office functions. But hiring staff, Venkataraman said, would not push either yieldco into bankruptcy.

Attached Files

US Researchers Develop Bacteria-Powered Solar Panel

A typical "traditional" solar panel on the roof of a residential house, made up of 60 cells in a 6x10 configuration, generates roughly 200 watts of electrical power at a given moment. (Representational Image)

NEW YORK: In a first, a team of US researchers has created a bio-solar panel that can generate 5.59 microwatts of energy - a big step in the evolution of bacteria-powered energy to run small devices in remote areas where regular battery replacement is not possible.

"Once a functional bio-solar panel becomes available, it could become a permanent power source for supplying long-term power for small, wireless telemetry systems as well as wireless sensors used at remote sites where frequent battery replacement is impractical," said study co-author Seokheun "Sean" Choi from Binghamton University.

The researchers connected nine biological-solar (bio-solar) cells in a 3x3 pattern to make a scalable and stackable bio-solar panel.

The panel continuously generated electricity from photosynthesis and respiratory activities of the bacteria in 12-hour day-night cycles over 60 hours.

"This research could also enable crucial understanding of the photosynthetic extracellular electron transfer processes in a smaller group of microorganisms with excellent control over the microenvironment, thereby enabling a versatile platform for fundamental bio-solar cell studies," Mr Choi noted.

A typical "traditional" solar panel on the roof of a residential house, made up of 60 cells in a 6x10 configuration, generates roughly 200 watts of electrical power at a given moment.

The cells from this study, in a similar configuration, would generate about 0.00003726 watts. So it isn't efficient just yet but the findings open the door to future research of the bacteria itself.

"The metabolic pathways of cyanobacteria or algae are only partially understood, and their significantly low power density and low energy efficiency make them unsuitable for practical applications," noted Mr Choi in a paper published in the journal Sensors and Actuators B: Chemical.

"There is a need for additional basic research to clarify bacterial metabolism and energy production potential for bio-solar applications," he added.

Attached Files

California has too much solar power. It needs another grid to share with.

The US has no national electricity grid. Instead, it has a patchwork of grids, operated as closed-off regional and local fiefdoms with little trade among them.

One of the most important steps America can take to integrate more wind and solar power is to connect and expand those grids.

California is trying to take a small step in that direction. In the process, it is revealing the kinds of political tensions that stand in the way of grid integration.

California needs somewhere to put all its solar energy

The story comes to us via an excellent report by Lauren Sommer at KQED Science. It's about a problem that's beginning to hit in California — and will hit in other places in years to come, as renewable energy spreads.

Every so often, solar panels in California produce more solar energy than the grid needs. When these oversupply events occur, grid operators manually "curtail" solar production, cutting some panels off from the grid, effectively letting clean, zero-carbon energy go to waste.

This doesn't happen all that often yet — roughly 2.2 GWh of renewable energy were curtailed due to oversupply in 2014, relative to the 44,000 GWh of renewable energy the grid used — but the problem is expected to get worse as wind and solar expand in the state.

This illustrates the key challenge that wind and solar (together known as variable renewable energy, or VRE) pose to self-contained grids: their intermittency. A lot of solar comes flooding in at midday, and then it all goes away at night. Sometimes it can go away all at once and come back a few minutes later (a phenomenon known as "clouds"). Wind can come all at once and then die down all at once.

It's a challenge for today's grids to handle both the quantities involved at peak VRE production times and the steep "ramps" up or down in supply and demand that come with VRE.

Attached Files

Agriculture

European Parliament backs glyphosate but with conditions

European politicians advised on Wednesday that the herbicide glyphosate should only be approved for another seven years, rather than the 15 proposed by the EU executive, and should not be used by the general public.

Environmental campaigners have demanded a ban on glyphosate, which is used in products such as Monsanto's Roundup, on the grounds it can cause cancer, though EU and U.N. scientists disagree on whether there is a link.

The European Commission has proposed glyphosate be approved for 15 years when an existing license expires at the end of June.

Wednesday's European Parliament motion supported renewal for seven years and urged a ban on non-professional use, as well as in and around public parks and playgrounds.

Angelique Delahaye, a French member of the European People's Party, the main center-right group in the parliament, said many people were concerned but farmers needed glyphosate.

"The agricultural sector depends highly on it and it is absolutely necessary to find solutions to replace it before totally forbidding it," she said.

Wednesday's motion is not binding, but can influence member states so far undecided on whether to approve glyphosate's use.

Member states were initially expected to extend approval in March, but EU sources, speaking on condition of anonymity, said there was not enough support to reach a majority decision so the vote was deferred.

Attached Files

Brazilian miner Vale is teaming up with US private equity firm Apollo to bid for Anglo American's niobium and phosphates business in Brazil, three sources familiar with the matter said on Tuesday.

A sale of the assets, used for making fertilisers, could fetch around $1-billion for Anglo American.

The London-listed miner has said it wants to raise as much as $4-billion from divestitures, in order to cut net debt to under $10-billion by the end of the year as it grapples with a commodity price slump. A spokesperson for Anglo said the sale process is progressing as planned.

Vale declined to comment, while Apollo did not immediately respond to requests for comment. Two separate sources said that The Mosaic Company, the world's largest phosphate and potash supplier, could also be interested in the sale process, with binding bids expected in a few weeks.

Vale is the biggest producer of phosphate in Brazil, which in turn is the planet's fifth-biggest user of fertiliser, according to its website. It owns potash mine Taquari-Vassouras, while Anglo's assets include Ouvidor, Brazil's second-largest producer of phosphate rock. Mining industry sources said that Vale could extract synergies due to the proximity of Anglo's assets to its own, while Apollo could help provide capital at a time when many mining companies are struggling with their balance sheets.

Private equity firms have been seeking to capitalise on the commodity price slump, but have struggled to compete with mining companies which can offer higher prices based on potential synergies in deals.

Vale is itself seeking to slash its net debt by $10-billion and plans to sell assets to help insulate itself against further falls in iron-ore and nickel prices, after it announced its biggest loss in decades in February.

Last week it denied reports that it was seeking to raise cash by selling a minority stake in its fertiliser unit. "They are not selling because they are looking at buying in this area," one of the sources said.

Germany backs EU plan to approve weedkiller glyphosate

Germany plans to back an EU proposal that would allow the continued use of glyphosate in weedkillers, according to a letter from the agriculture ministry.

Glyphosate is used in many herbicides including Monsanto's Roundup, but has provoked a dispute between EU and U.N. agencies over whether it might cause cancers.

The EU last month delayed a decision on whether to approve a European Commission proposal to extend the authorization of glyphosate for 15 years until 2031. The existing authorization is due to lapse in June.

In the German letter, first reported by daily Sueddeutsche Zeitung, the ministry's plant protection unit says it agrees with the assessment of the European Food Safety Authority (EFSA), which issued an opinion that glyphosate was unlikely to cause cancer.

The EFSA's conclusion was at odds with the view of the World Health Organization's International Agency for Research on Cancer (IARC), which has classified glyphosate as "probably carcinogenic to humans".

Environmental campaigners have called for a ban and a German environmental group said earlier this year it had found traces of the chemical in 14 of the country's most popular beers.

The EFSA study focused on glyphosate as a single active substance, but the European Commission has said it would seek to identify whether some products should be banned because of the substances they combine with glyphosate, which could add to risks.

France's health and safety agency said last week it was poised to ban weedkillers that combine chemicals glyphosate and tallowamine because of concerns over possible health risks.

Pork Shortage in China Leads to Soaring Prices, Rush to Import

Too few pigs are headed to markets in pork-loving China, leading to soaring domestic prices and a rush of pork imports from the U.S. and elsewhere to fill the gap. As WSJ’s Lucy Craymer reports:

Prices of the key ingredient in everything from lunchtime pork dumplings to fiery Sichuan-style mapo tofu have risen 48% in China in the last year. The average price of pork in the week ended April 2 was 25.67 yuan a kilogram (roughly $1.80 a pound), up from 17.35 yuan a kilogram a year earlier, according to China’s Ministry of Agriculture.

High pork prices were felt in the latest inflation data out of China on Monday. Consumer prices were up 2.3% in March from a year earlier, steady from the previous month. The food-price component of the index was up 7.6% in March, led by higher pork and vegetable prices. Pork continues to hold a high weighting—around 3%, according to Rabobank—in the price of the basket of goods and services that is used to calculate the consumer-price index.

Prices of pork in China, the world’s largest pork consumer, are higher than elsewhere in the world. For example, pork in Europe sells on average for 65 U.S. cents a pound.

Attached Files

Vertellus Specialties skips debt interest payment -sources

Vertellus Specialties Inc, a U.S. manufacturer of agricultural chemicals such as pyridine, is in talks to cut a deal with its lenders after missing a debt interest payment, according to people familiar with the matter.

Weak agricultural markets, combined with overcapacity and increased competition from China, have hit the chemical company, owned by buyout firm Wind Point Partners. Moody's Investors Service Inc said the company, which has about $555 million in debt, will need assistance meeting the requirements of some of that debt as sales and profits plummet in some key divisions.

Vertellus hopes to clinch a forbearance agreement with lenders as early as next week, the people said this week. The company is working with investment bank Jefferies LLC on debt restructuring options, the people added.

Vertellus has also been exploring the sale of its specialty materials and sodium borohydride units to pay down debt, the people said. The sodium borohydride unit could fetch as much as $200 million, according to one of the people.

The sources asked not to be identified because the deliberations are confidential. Requests for comment to Wind Point and Vertellus were not immediately returned. Jefferies declined to comment.

Indianapolis, Indiana-based Vertellus has manufacturing plants across the United States, Asia and Europe. It reported revenue of $596 million in 2015, Moody's said.

Vertellus' term loan and revolving credit facility do not mature until 2019, according to Thomson Reuters data.

Moody's said that without help from Wind Point, the company will not be able to meet covenants in the term loan this year.

France to ban some glyphosate weedkillers on health concerns

France's health and safety agency has decided to ban weedkillers that combine chemicals glyphosate and tallowamine because of uncertainty over possible health risks, it said on Friday.

The ANSES agency sent a letter this week to manufacturers informing them that it intends to withdraw the authorisation for such products, Francoise Weber, the ANSES deputy director-general, told Reuters.

The agency had reviewed products combining glyphosate and tallowamine after conclusions published in November by the European Food Safety Agency (EFSA) suggested greater potential risks compared with glyphosate alone, she said.

"It is not possible to guarantee that compositions containing glyphosate and tallowamine do not entail negative effects on human health," Weber said by telephone.

Glyphosate, a common ingredient in weedkillers such as Monsanto's Roundup, has been the subject of fierce debate in the past year since a World Health Organisation body classified it as probably carcinogenic, and European Union countries are discussing whether or not to extend its EU-wide licence.

France's environment minister has been pushing for an EU-wide ban on glyphosate-based products and is also supporting legislation going through the French parliament that would outlaw a type of pesticide blamed for harming honey bees.

Tallowamine, technically referred to as polyethoxylated (POE) tallowamine, is used in weedkillers to allow them to be absorbed effectively by plants.

The substance is combined with glyphosate in many weedkillers but a large number of glyphosate products without tallowamine are available in France, Weber said.

Glyphosate and tallowamine combinations were previously withdrawn from the German market in a voluntary step by manufacturers, she added.

Monsanto said the commercial impact on the company would be "minimal" given that it had already shifted away from using tallowamine.

In an emailed statement, the U.S. crop seed and chemical company described the debate around glyphosate in Europe as "political" and said that tallowamine-based products "do not pose an imminent risk for human health when used according to instructions".

Like the debate over pesticides and bees, arguments over glyphosate weedkillers have divided scientists and pitched environmental protection groups against chemical companies and farmers who say there are no viable alternatives.

A final decision by ANSES on withdrawing glyphosate-tallowamine mixtures would take at least several weeks because the agency must first consider comments by the manufacturers, which have two weeks to submit arguments, Weber said.

Precious Metals

Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market in a lawsuit filed on Friday.

The lawsuit, which was originally filed in a New York district court by veteran litigator J. Scott Nicholson, a resident of Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix.

Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.

Which is why we were surprised to read overnight that not only has this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troulbed German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors, Reuters reported citing a court filing on Wednesday showed.

Terms were not disclosed, but the accord will include a monetary payment by the German bank, a letter filed in Manhattan federal court by lawyers for the investors said.

It goes without saying, that there would have been neither a settlement nor a payment if the banks had done nothing wrong.

According to Reuters, Deutsche Bank has signed a binding settlement term sheet, and is negotiating a formal settlement agreement to be submitted for approval by U.S. District Judge Valerie Caproni, who oversees the litigation. A Deutsche Bank spokeswoman declined to comment. Lawyers for the investors did not immediately respond to requests for comment.

But wait there's more.

In a curious twist, the settlement letter reveals a stunning development, namely that the former members of the manipulation cartel have turned on each other. To wit:

“In addition to valuable monetary consideration,Deutsche Bank has also agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement. In Plaintiff’s estimation, the cooperation to be provided by Deutsche Bank will substantially assist Plaintiffs in the prosecution of their claims against the non-settling defendants.”

Earlier today when we reported the stunning news that DB has decided to "turn" against the precious metals manipulation cartel by first settling a long-running silver price fixing lawsuit which in addition to "valuable monetary consideration" said it would expose the other banks' rigging having also "agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement" we said "since this is just one of many lawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has "turned" that much more curious information about precious metals rigging will emerge, and will confirm what the "bugs" had said all along: that the precious metals market has been rigged all along."

This was confirmed moments ago when Reuters reported that Deutsche Bank has also reached a settlement in US litigation alleging the bank conspired to fix gold prices. In other words, hours after admitting it was rigging the silver market, it did the same for gold.

Attached Files

China's big four banks, StanChart, ANZ to join yuan gold benchmark

Top Chinese banks, alongside Standard Chartered and ANZ, will be among 18 members to join a new yuan-denominated gold benchmark that signals China's biggest step towards becoming a price-setter for the metal.

As the world's top producer, importer and consumer of gold, China has baulked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.

The yuan gold fix, to be launched on April 19, is not expected to pose an immediate threat to the gold pricing dominance of London and New York, but it could ultimately give Asia more power, particularly if the Chinese currency becomes fully convertible.

The Chinese benchmark price will be derived from a 1 kg-contract to be traded by the 18 members on the Shanghai Gold Exchange (SGE), which will act as the central counterparty.

The price-setting process will include China's big four state-owned banks, Industrial and Commercial Bank of China , Agricultural Bank of China, Bank of China and China Construction Bank, the SGE said in a statement on its website.

Bank of China (Hong Kong), retailers Chow Tai Fook and Lao Feng Xiang, Swiss trading house MKS, Chinese miners China National Gold Group and Shandong Gold Group will also be members, SGE said.

The benchmark price, to be quoted in yuan per gram, will be set twice a day based on a few minutes of trading in each session.

The spot benchmark in London, quoted in dollars per ounce, is set via a twice-daily auction on an electronic platform with 12 participants after starting off with six.

The London fix, which was previously set via a teleconference among banks, was replaced by electronic auctions after a shake-up in benchmark setting following a scandal over rigging of the Libor interest rate broke in 2012.

Support from foreign banks will be crucial for the international use of the yuan benchmark, but China had struggled to get them to sign up due to sensitivity around benchmarks amid scrutiny by regulators.

Reuters reported in January that China had warned foreign banks it could curb their operations in the domestic market if they refuse to participate in the benchmark-setting process.

Standard Chartered and ANZ, the two foreign banks participating in the fix, have gold import licences in China. HSBC also has an import licence but was not named by SGE as one of the participating banks.

Russia's Polyus Gold plans gradual free float increase -paper

Polyus Gold, Russia's largest gold producer, may place at least 5 percent of its shares in Moscow in the next few months to comply with listing rules, Vedomosti newspaper reported on Wednesday.

The company, controlled by the family of Russian tycoon Suleiman Kerimov, has a free float of 5 percent. It needs to raise this to at least 10 percent to meet the requirements for the first listing level, which the Moscow Exchange upgraded it to on Tuesday.

Polyus plans a gradual increase in its free float but is yet to decide on how to do it, its chief executive Pavel Grachev, told a conference in Moscow on Tuesday.

The company may sell some of its treasury shares, which it holds after a recent buy-back, or shares may be sold by its controlling shareholder, Vedomosti quoted Grachev as saying.

It could be done in several private deals or in a public placement, Grachev told Interfax news agency on Tuesday. Polyus did not immediately comment when contacted by Reuters.

The company's market value was at 705 billion roubles ($10.7 billion) at the market close on Tuesday, up 29 percent so far this year partially thanks to higher global gold prices.

"We welcome the potential liquidity increase (currently $300,000 traded daily), but this alone would be insufficient to warrant a premium to the market price," analysts at Aton said.

Polyus secured a credit line worth $2.5 billion from Russia's largest lender Sberbank earlier this year which it used to finance a $3.4 billion buy-back of its shares from its main shareholder.

If Gold is good, Silver is great!

Base Metals

China's state-owned metals consultancy Beijing Antaike has lowered its zinc concentrate demand forecast for China this year to 5.69 million mt, from 6.33 million mt previously, as the country's galvanized steel sector falters.

The revised forecast implies demand this year will fall 1% from 5.755 million in 2015.

According to Antaike, spot treatment charges for imported zinc concentrate in February were $120-$130/mt, down from $130-$140/mt in January. It said while TC offers were as low as $115/mt, trades of imported zinc concentrate were thin as imported concentrate prices were higher than domestic levels based on the February TCs.

TCs, the fees paid to smelters by mines for converting the concentrate into refined zinc, are a key source of revenue for smelters.

Antaike expects China to import just 1.2 million mt of zinc concentrate in 2016, down 20% year on year, as global supply tightens following the shutdown of two mines, namely Century in Australia and Lisheen in Ireland.

China's zinc concentrate output this year is expected to rise 3.5% to 4.4 million mt, on the back of an increase in domestic zinc smelting capacity, mainly in central China's Anhui province and Qinghai province in northwestern China, Antaike said.

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Why the LME is zeroing in on warehouse load-out charges (again)

A huge amount of aluminum is heading for the exit door on the London Metal Exchange (LME).

The amount of metal earmarked for physical load-out from LME warehouses has mushroomed over the last month from 561,450 tonnes on March 14 to a current 1,257,650 tonnes. So-called canceled tonnage now represents almost half of all the aluminum in the system.

Most of these cancellations have occurred at the Dutch port of Vlissingen, where the amount of metal awaiting load-out has soared to 898,975 tonnes, or 80 percent of the total.

This sudden surge in pending departures, as always with aluminum, is all about storage costs.

Because from May metal trapped in a load-out queue over 30 days will be subject to drastically reduced rent or, if the queue is over 50 days, no rental charges at all.

Pacorini Metals, the logistics arm of Swiss trade house Glencore, had a load-out queue of 84 days at the end of March in Vlissingen. It has just got a lot longer over the last few days as traders and financiers lick their lips at the possibility of zero rent.

There will be few tears shed for Pacorini, which has been one of the main beneficiaries of load-out bottlenecks.

But it won't be completely out of pocket because each ton that is loaded out will earn it another 31.40 euros ($35.40).

And that's the amount that each ton will gain in value as it moves from a Pacorini shed onto a truck, another part of the disconnect between the LME price of aluminum and the price paid by an actual user.

Which is why the LME's latest discussion paper on tackling excessive storage charges zeroes in on that load-out charge, or as it's known on the exchange, the "free on truck" (FOT) charge.

The LME had flagged well in advance it was about to engage in a consultation on the high headline rental and FOT charges in its warehousing system in light of some sharp increases in both in the current rent-cycle year.

And last week's "Discussion Paper relating to LME Warehousing Costs" included four options aimed at restricting future increases in both.

It was the inclusion of a fifth option, switching all the LME's contracts from the current "in-warehouse" to "free-on-truck" basis that was the surprise.

Zambia's parliament will later on Wednesday debate the amended mines bill which proposes to reduce copper mineral royalties to a variable tax of between 4 to 6 percent, depending on the price of the metal.

The Mines and Minerals Development (Amendment) Bill also proposes to reduce mineral royalties for other base metals to 5 percent for both underground and open cast operations.

Taseko signs power cost deferral agreement for Gibraltar Mine

Taseko announces that an agreement to defer up to 75% of power costs for the Gibraltar Mine has been signed, retroactive to March 1, 2016.

In February, the Government of British Columbia announced a five-year power rate deferral program for BC mines. This deferral program, which was put in place to help the Province's mining industry during the weak economic environment, allows qualifying mines to defer up to 75% of their electricity costs based on a sliding-scale of metal prices. At today's copper price, the maximum deferral of 75% will apply.

Russell Hallbauer, President and CEO of Taseko, commented, "Electricity is one of Gibraltar's biggest expenses; accounting for nearly 10% of the mine's total operating costs. This deferral program will reduce Gibraltar's annual spending by up to C$18 million and is another initiative to help the Company ensure sufficient working capital during this extended period of lower copper prices. Along with the other cost containment initiatives implemented over the past year, the Company is well positioned to manage through this challenging time. We have worked aggressively to reduce operating costs, as evidenced by the 15% reduction in cost per ton milled achieved in 2015 to C$9.41 in the fourth quarter. The impact of the cost deferral program is equivalent to a further C$0.60 per ton milled reduction."

"Cooperative agreements between industry, government and industry associations can only be achieved through strong working relationships which come as a result of management teams with experience in the regions they operate," concluded Mr. Hallbauer.

China copper imports hit record in March, up 30 pct in Q1

China's copper arrivals hit a record in March, pushing up total imports 30.1 percent in the first quarter from last year, after price differentials between domestic and international markets favoured imports in previous months.

Arrivals of anode, refined copper, copper alloys and semi-finished copper products reached 1.43 million tonnes in January to March, data from the General Administration of Customs showed on Wednesday.

In March, imports were at a monthly record 570,000 tonnes versus the previous record 536,000 tonnes in January 2014. That rose 35.7 percent from the Lunar New Year holiday month of February and 39 percent higher from a year earlier.

March imports also reflected that importers had scheduled more shipments for expected seasonal demand in April and May, said traders.

Still, high imports in the first quarter did not reflect domestic demand as the growth in world's second-largest economy has slowed, said traders. Imports added supply pressure in the country, prompting Chinese smelters to consider raising exports.

"Strong imports were because of good arbitrage ratios. Price differentials between Chinese prices and the LME favoured imports in March, as well as in the whole first quarter mostly," said Zhou Jie, a trade manager at China International Futures (Shanghai).

Credit had increased to the market in March from the previous two months, supporting importers' buying, he added.

Zhou said imports in April may stay strong, but that could be off March's record as credit currently was not as good as last month.

Helen Lau, analyst at Argonaut Securities also sees lower imports in April due to high inventories in China.

Refined copper stocks monitored by the Shanghai Futures Exchange CU-STX-SGH hit a record on March 18, though they have dropped since.

Domestic demand for spot refined copper has improved from the past two months as factories bought more metal for the peak production season in April and May, said a trader at a state-owned smelter. The demand was still weaker than the same time previous years.

Still, a trader at a large copper rods production plant in the southern province of Guangdong said many small factories were struggling with a cash crunch and did not have up-front cash to buy metals, which has forced some to cut orders.

"Since last year, many rods sellers have asked for a cash-for-delivery term because of fears of default. This year, some power cables and wires producers are asking the same, which means the cash crunch is extending," he said.

Imports of raw material copper ores and concentrates jumped 34 percent from a year ago to 4 million tonnes in the first quarter.

Ore imports in March stood at 1.37 million tonnes, down 6.2 percent from February.

Firm domestic aluminium prices limited exports in the first quarter as the prices have risen about 20 percent since a record low in November 2015.

Exports of primary aluminium, alloy and semi-finished aluminium products fell 11 percent on-year to 1.08 million tonnes in January to March.

March outflows were 420,000 tonnes, up 50 percent from February 2016 and 16.7 percent higher than a year earlier.

Russian tycoon Abramovich offers to buy Norilsk shares worth $158 mln

A company controlled by Russian billionaire Roman Abramovich and partners has offered $158 million to buy 0.79 percent of shares in Norilsk Nickel to increase its stake in the mining giant to more than 6 percent, Norilsk said on Tuesday.

The price offered is equivalent to Norilsk's average share price on April 4-8 and to around $12.63 per American Depository Receipt (ADR), the company said in a statement.

Norilsk holds the shares following a share buyback programme last year. Abramovich, owner of Chelsea soccer club, and his partners in Crispian Investments Limited already own 5.5 percent of Norilsk, the world's biggest palladium producer and second-biggest nickel producer.

Norilsk said it will consider the offer at a board of directors meeting on April 18. The purchase would take Crispian's stake to 6.29 percent.

Norilsk's ADRs in London were trading at $13.08 in London on Tuesday after falling 29 percent in the past year as the company was hit by the commodities slump and weak Russian economy. Its shares in Moscow were down 1 percent on Tuesday.

Vedanta’s Zambian unit's copper output remains flat

Output from London-listed Vedanta Resources’ copper unit in Zambia remained flat during the fourth quarter of the year.

This emerged as the unit battled a 25% increase in power tariffs in January, which impacted negatively on the cost of production, costing the miner $3-million a month. The company was now exploring a range of possible solutions and was “in continued dialogue with the relevant stakeholders”.

During the fourth quarter to March, mined metal production inched up 1% quarter-on-quarter to 28 600 t, also rising 6% on a year-on-year basis to 123 000 t. During the year to March 2016, the company’s integrated volume, while stable at 117 400 t, was lower than the mined metal output, owing to an increase in concentrate inventory.

Custom volumes were at 64 300 t, 24% higher year-on-year owing to a biennial shutdown during the prior year and improved availability of third-party concentrate. A biennial shutdown scheduled for the second quarter of 2017 would result in an increase in smelter throughput exceeding 80 t/h.

Alcoa profit falls; demand seen growing faster than supply

Alcoa profit falls; demand seen growing faster than supply

Metals company Alcoa Inc on Monday reported a lower quarterly profit, with results hurt by low commodity prices, the strong U.S. dollar and plant closures or divestments, but the company's top executive said he expected aluminum demand to grow faster than supply this year.

Alcoa also lowered its 2016 outlook for global sales in the aerospace industry, and its shares fell 5 percent in after-hours trading.

Alcoa will split in two in the second half of this year.

The company's traditional smelting business will retain the Alcoa name, while a new firm named Arconic will retain the added-value aerospace and automotive business involving strong, light alloys that the company has worked hard to build in recent years.

But that traditional business has been hurt by slumping aluminum and alumina prices. Alcoa Chief Executive Klaus Kleinfeld told Reuters in an interview that the company expects global aluminum demand to grow by 5 percent this year, while supply should increase by 2 percent.

"That should create additional price support" for aluminum, he said.

He added that the company's closure or sale of some smelters was a way to "achieve the profitability that we want to get to."

Alcoa said it now expects global sales in the aerospace industry to grow in a range of 6 to 8 percent this year. That is down from its last forecast in the fourth quarter of 2015 of growth between 8 and 9 percent.

Kleinfeld said he was confident in this outlook, citing long order backlogs for the airline industry.

The company said it expects global automotive production to grow between 1 and 4 percent this year.

The New York-based company posted first-quarter net profit of $16 million or 0 cents per share, down from $195 million or 14 cents per share a year earlier.

Analysts on average had expected earnings per share for the quarter of 2 cents.

Excluding one-time items, the company said earnings per share totaled 7 cents.

Revenue for the quarter fell 15 percent to $4.95 billion from $5.82 billion a year earlier. Analysts had expected revenue for the quarter of $5.14 billion.

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Steel, Iron Ore and Coal

China Q1 thermal power output down 2.2pct on year

China Q1 thermal power output down 2.2pct on year

Electricity output from China’s thermal power plants – mainly coal-fired – stood at 1,049.3 TWh in the first quarter this year, dropping 2.2% year on year, showed data from the National Bureau of Statistics (NBS) on April 15.

The decrease in China’s thermal power generation was mainly attributed to surplus power supply amid slowing domestic economy.

By contrast, China’s hydropower output increased 17.5% on year to 203.3 TWh during the period, indicating a sound development of hydropower station across the country.

Total electricity output in China reached 1,355.1 TWh over January-March, up 1.8% from a year ago, the NBS data showed.

In March, China’s total power output increased 4% on year to 477.9 TWh, with that of thermal and hydropower standing at 364.2 TWh and 74.7 TWh, up 1.2% and 9.2% from a year ago, respectively.

That equated to daily output of 15.42 TWh on average in the month, rising 4% on year.

Over January-March, the share of thermal power generation in the total power generation stood at 77.43%, while hydropower output accounted for 15%.

Much attention has been drawn on the excess installed capacity of thermal power generation lately, which was forecasted to be more than 200 GW during the "13th Five-Year Plan" period (2016-2020).

Local governments and enterprises are further urged by National Development and Reform Commission (NDRC) and National Energy Administration (NEA) to slow down the construction of coal-fired power utilities, in response to the current situation.

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China March coal output dips 4.5 pct on year - stats bureau

China produced 294 million tonnes of coal in March, down 4.5 percent from a year ago amid state-led efforts to restrict production and tackle a supply glut.

Chinese coal output over the first quarter reached 811.27 million tonnes, down 5.3 percent on the year, according to data from the National Bureau of Statistics published on Friday, with miners under pressure to limit output to shore up prices. Coking coal output for use in steel production also fell 5.3 percent in the first quarter on the year to 36.05 million tonnes.

Prices at the port of Qinhuangdao in Hebei province SH-QHA-TRMCOAL have gained 5.4 percent so far in 2016, suggesting that China's efforts to curb supplies are having an impact, although the values are still down 20 percent from a year ago.

Analysts forecast that prices will recover further in the coming months, with power plants starting to restock after letting inventories run low in the first two months of the year.

"Domestically, output is being cut, inventories are falling, so the price is going up," said Zhang Xiaojin of Everbright Futures. "Traders are quite positive right now."

Mao Zhongsheng, the general manager of the sales division of the Shenhua Group, China's biggest state mining firm, told a conference on Thursday that sentiment in the market was showing signs of improvement in March following a difficult year.

He said operating rates at coal mines in key producing regions in Inner Mongolia and Shanxi had risen to over 90 percent in March as they prepare for a seasonal spike in demand.

"Industrial output has brought about a recovery in power consumption, and coal consumption at key coastal power plants rose 960,000 tonnes to 34.92 million tonnes in March, putting an end to a period of monthly declines that began in September last year," he said.

Other key downstream sectors also showed signs of improvement in March.

Chinese steel output rose 2.9 percent on the year to 70.65 million tonnes, as a seasonal pickup in demand made production profitable.

After months of declines, cement production - another sector heavily dependent on coals - rose 24 percent compared to last year, reaching 201.4 million tonnes in March.

Power generation also rose 4 percent to 477.9 billion kilowatt-hours in March.

Chinese coal imports in March rose 15.6 percent on the year, data from the country's customs authority showed on Wednesday, suggesting major power plants were restocking ahead of summer.

Analysts warned, however, that the March figure may have included some volumes imported in February but not counted because of disruptions due to Chinese New Year.

China's crude steel output hits record high in March

China's crude steel output hit a record high of 70.65 million tonnes in March, data showed on Friday, as a rally in steel prices and a seasonal pick-up in demand encouraged steel mills in the world's top producer to boost production.

Steel output rose 2.9 percent from a year ago, beating market expectations, although total output in the first quarter was down 3.2 percent at 192.01 million tonnes, according to data from the National Bureau of Statistics.

Mills increased production last month in response to restocking by steel users that has helped drive up domestic prices by 34 percent this year.

Some steel mills are making a profit of as much as 500-600 yuan ($77.11-$92.49) a tonne, but a slowing economy, credit shortages and China's target of cutting overcapacity in the sector is expected to hit momentum later this year.

"This is really surprising. Steel output will likely rise further in the second quarter due to improving demand, but we still expect full-year output to drop slightly from 2015 due to supply-side reforms and tight credit," said Yu Yang, an analyst at Shenyin & Wanguo Futures in Shanghai.

China's economy grew 6.7 percent in the first quarter from a year earlier, its slowest pace in seven years, although other indicators show the slowdown in the world's second-largest economy may be bottoming out.

China accounts for about half of global steel production and it aims to cut between 100 million and 150 million tonnes of crude steel capacity in five years.

Crude steel production fell 2.3 percent to 803.8 million tonnes last year, the first annual drop since 1981.

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Shenhua starts pilot run of new coal-to-olefin project

Shenhua Group started the pilot run of its new coal-to-olefin project at Urumqi inThe project, which was built and operated by Xinjiang Coal & Chemical Branch Company under Shenhua group, has a designed capacity of 0.68 million tonnes per annum.

Shenhua Group has invested a total 22.88 billion yuan ($3.53 billion) on the project, the most-invested-ever coal chemical project since the establishment of the autonomous region, said Peng Xiaochun, Party secretary of the branch company.

It has reportedly finished its construction, and is expected to be put into operation before or after International Labors’ Day holidays in early May.

Meanwhile, the branch company, approved by Shenhua Group on April 10, will be altered to the Group’s subsidiary through official procedures. The move means that all the company’s taxes will be a part of local government’s revenue, which undoubtedly provides sound support for local economic development, Peng said.

Whitehaven output hits record on Maules Creek ramp-up

Coal miner Whitehaven Coal has reported another quarter of record run-of-mine (ROM) production, defying market sentiment. The ASX-listed miner on Thursday reported that ROM coal production for the three months to March had increased to 5.6-million tonnes, from 4.7-million tonnes reported in the previous corresponding period.

Coal production increased on the back of the Maules Creek mine, in New South Wales, ramping up to produce two-million tonnes ROM coal during the quarter.

During the next two to three years, the mine would be ramped up to a RoM output of 13-million tonnes a year, with the mine expected to reach a ramp-up stage of 10.5-million tonnes by January next year.

Meanwhile, coal sales for the quarter were also up by 48% on the previous corresponding period, to 5.5-million tonnes, which was also a record for Whitehaven.

The miner told shareholders that sales of semi-soft coking coal from the Maules Creek mine exceeded expectations with a number of trail cargoes to new steelmakers. The quality of the coal was also attracting strong interest from northern Asian buyers, the company said.

Looking ahead, Whitehaven stated that it was on track to reach its saleable coal production guidance of between 19.5-million tonnes and 20.1-million tonnes in 2016.

China Mar coke exports soar 63.6pct on year

China’s exports of coke and semi-coke surged 63.6% on year and up 27.3% from February to 1.12 million tonnes in March, showed data released by the General Administration of Customs (GAC) on April 13.

It was the highest monthly export since 2016, though still 22.76% below last December’s 1.45 million tonnes – a five-and-half-year high since July 2008 after the Chinese government scraped 40% tariff and quota on the steelmaking material.

The value of the March exports stood at $136.73 million, down 14.3% year on year but up 44.03% from last month. This translated to an average export price of $122.08/t, rising $14.20/t from the month prior.

Over January-March, China exported a total 2.74 million tonnes of coke and semi-coke, up 22.1% year on year.

China’s domestic coke market rebounded in March, as demand increased and prices rose amid the rise in steel prices as construction activities recovered after the Chinese Lunar New Year holidays.

Mining companies and private equity firms are circling Anglo American's metallurgical coal assets in Australia, which could be valued at around $1.5 billion in a sale, several sources familiar with the matter said on Wednesday.

Major mining firms BHP Billiton, Rio Tinto and Glencore, as well as U.S. private equity firm Apollo, have all signed non-disclosure agreements as part of the sale process, which is now entering its second round, the sources said.

Anglo American said in February that discussions were underway about divesting its Moranbah and Grosvenor assets, as part of its plans to sell $3-4 billion of assets this year in order to cut debt. The process is being run by Bank of America Merrill Lynch, the sources said.

Anglo, BHP, Glencore and BofA Merrill Lynch declined to comment. Apollo and Rio were not immediately available to comment.

The assets could be valued at around $1.5 billion, one of the sources said, cautioning that valuation was difficult in the current commodity price environment and that no deal was certain.

Metallurgical or coking coal is used in steelmaking. Some industry players have expressed caution at the future of coking coal assets given their increasing unpopularity from an environmental standpoint and their exposure to the troubled steelmaking industry.

Several mining bankers said that BHP was a likely frontrunner for the assets through its BHP Billiton Mitsubishi Alliance (BMA), which operates seven mines in Australia's Bowen Basin, close to Moranbah and Grosvenor, a $1.95 billion mine development project.

Earlier this month Anglo said it had sold its stake in Australia's Foxleigh metallurgical coal mine to a consortium led by Taurus fund management.

Reuters reported on Tuesday that Apollo had teamed up with Brazilian miner Vale on a joint bid for Anglo's niobium and phosphates business in Brazil.

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Iron Ore leaps above $60 as China data, steel’s rally boost outlook

Iron ore keeps on delighting the bulls. The raw material that was battered for the past three years has vaulted back above $60 a metric ton after data from China added to signs that Asia’s top economy may be on the mend and local mills’ expanding margins spurred increased demand.

Ore with 62% content delivered to Qingdao in China rose 2.1% to $60.48 a dry ton on Wednesday, the highest since March 8, according to Metal Bulletin. Prices have gained for three days, taking the advance this year to 39%. That’s a turnaround from 2015, when the benchmark plummeted 39% on a global glut and weakening steel demand in China.

The raw material has staged a surprise rally in 2016 after policymakers signaled they’re prepared to support growth, mills boosted purchases even as port stockpiles climbed, and steel prices advanced. Data on Wednesday showed China’s total exports jumped the most in a year, signaling that the second-biggest economy may be stabilising. Miners’ shares have surged, with Rio Tinto Group gaining in Sydney to the highest since November.

“As margins are very high currently, mills have an incentive to build steel inventories,” said Zhao Chaoyue, an analyst at China Merchants Futures Co. in Shenzhen. “They’re also more willing to accept higher iron ore prices.”

Mills in China, which account for about half of global production, have been boosting output after the Lunar New Year slowdown in February as property prices in some bigger cities advanced. Rising prices for steel have improved their profit margins, reversing a squeeze from last year.

Reinforcement bar, used in construction, has climbed 32 percent in China in 2016 after five years of losses, with futures in Shanghai closing on Wednesday at the highest level since June. Hot-rolled coil futures also rallied this year. That helped to lift the Bloomberg Intelligence China Steel Profitability Index to the highest in almost five years.

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Global steel demand to fall again in 2016, hit by China: Worldsteel

Global steel demand will fall again this year as leading market China continues to slow, before eventually stabilizing in 2017, the World Steel Association forecast on Wednesday.

Falling demand has plunged the global steel market into crisis, with excess capacity taking a heavy toll on producers - including China - leading to plant closures and job losses.

Global apparent steel use - deliveries minus net exports of steel industry goods - is expected to fall 0.8 percent in 2016 to 1.488 billion tonnes after a 3 percent fall last year, according to Worldsteel.

China's steel demand is seen falling 4 percent this year to 654.4 million tonnes and a further 3 percent in 2017, after a slide of 5.4 percent in 2015, the group added.

China, which produces about half the world's steel, is under increasing international pressure to tackle a supply glut that has flooded world markets with cheap material.

Europe has taken a huge hit from the market slide. Tata Steel has put its UK business up for sale after substantial losses over the past two years.

"The global steel market is suffering from insufficient investment expenditure and continued weakness in the manufacturing sector," Worldsteel Director General Edwin Basson told a briefing in London.

"In 2016, while we are forecasting another year of contraction in steel demand in China, slow but steady growth in other regions including NAFTA (North American Free Trade Agreement countries) and EU is expected."

Next year, however, global demand of the key industrial metal is due to edge up by 0.4 percent to 1.494 billion tonnes, Worldsteel added.

Peabody, world's top private coal miner, files for bankruptcy

Peabody Energy Corp, the world's largest privately owned coal producer, filed for U.S. bankruptcy protection on Wednesday in the wake of a sharp fall in coal prices that left it unable to service a recent debt-fueled expansion into Australia.

The company listed both assets and liabilities in the range of $10 billion to $50 billion, according to a court filing. (1.usa.gov/1YsVlD0)

Peabody's Chapter 11 bankruptcy filing ranks among the largest in the commodities sector since energy and metals prices began to fall in the middle of 2014 as once fast-growing markets such as China and Brazil began to slow.

"This was a difficult decision, but it is the right path forward for Peabody," Chief Executive Officer Glenn Kellow said in a statement. "This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we've made in recent years and lay the foundation for long-term stability and success in the future."

Peabody has secured $800 million in debtor-in-possession financing from both secured and unsecured creditors, including a $500 million term loan, $200 million bonding accommodation facility and a letter of credit worth $100 million, the company said in release.

Peabody's debt troubles date back to its $5.1 billion leveraged buyout of Australia's Macarthur in 2011, a coveted asset at the time meant to position it as a supplier of metallurgical coal for Asian steel mills.

But as demand for metallurgical coal fell, particularly in China, Peabody's financial woes intensified. It made a $700 million writedown on its Australian metallurgical coal assets last year.

Producers accounting for about 45 percent of U.S. coal output have filed for bankruptcy in the current industry downturn, based on 2014 government figures.

China late-Mar key steel mills daily output down 1.8pct

The daily crude steel output of China’s key steel mills dropped 1.87% from ten days ago to 1.63 million tonnes in late March, according to data released by the China Iron and Steel Association (CISA).

Domestic prices of the six major steel products all increased recently, showed data from the National Bureau of Statistics (NBS), but it is still not enough to change the overall weakness materially. Debts and tight credit continued to restrict production recovery at many steel mills, as the industry undergoes the process of de-capacity.

For the week ending April 8, 77.49% of the 163 key steel mills’ blast furnaces were in operation, flat on week, with capacity utilization at 83.47%, down 0.04% from a week earlier. Of these mills, 67.48% or 110 mills were in profit, up 6.13% week on week.

By March 31, stocks of steel products in key steel mills fell 12.35% from ten days ago to 12.06 million tonnes.

Meanwhile, social stocks of steel products continued to reduce. As of April 8, rebar stocks in 35 main cities stood at 5.20 million tonnes, down 5.83% compared with a week ago, and wires stocks dropped 10.85% on week to 1.07 million tonnes.

Analysts expected downstream demand to improve further and steel prices to stay high in April, as the economy recovers while stocks stay low and production at reasonable level.

China Mar coal exports soar 297pct on yr

China exported a total 1.27 million tonnes of coal in March, soaring 296.9% on year and up 39.56% on month, showed data from the General Administration of Customs (GAC) on April 13.

It was the fourth consecutive rise on both year-on-year and month-on month basis, mainly attributed to low price advantage of China’s coal amid supply glut and falling prices in domestic market. Yet, coal exports still stayed at a relatively low level.

The value of the March exports was $92.86 million, increasing 166.7% from a year ago and up 30.65% from February. That translated to an average price of $73.12/t, falling $35.69/t on year and down $4.98/t on month.

In the first quarter of the year, China’s coal exports surged 185.1% on year to 2.79 million tonnes, with value up 90% to $109.4 million.

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Coal India cuts prices of top grade coal by up to 40pct

Coal India has cut its prices of top grade coal by up to 40% on the back of ample coal production as well as a large stockpile, local media reported.

The decision to cut prices of high energy content coal that competes directly with imported coal by 10-40% for both power producers and non-power producers for the first time in three years, following a global price crash of the commodity.

"With a rapid fall in international coal prices and a stockpile at pit heads, high energy coal produced mainly from Eastern Coalfields, South Eastern Coalfields and North Eastern Coalfields have been slashed for over 90%," a senior Coal India official was cited as saying by Indian media the Economic Times.

A senior power sector official said they have been told that the price cut offer will remain valid for the entire FY 2016-17 and it is being introduced on an experimental basis, the report said.

According to fuel supply agreements signed by Coal India with its consumers, Coal India was to charge a 10% premium over its notified price for more than 90% of contracted quantity of coal supplied in a year. If the coal supplied was between 95% and 100% the premium was to be 20%. Any coal supplied over 100% of the contracted volume was to be charged 40% over the base price.

"We have now decided to waive the premiums charged for supplying additional coal over 90% of contracted supply volume," said the Coal India official. "Thus the consumers get a 10% discount for receiving between 90% and 95% of the contracted volume.

The discount would be 20% for volumes between 95% and 100% of the contracted volume and 40% for volumes beyond 100%," the official added.

Coal India officials said that if the move prompts its consumer to lift more coal, then the company may even consider introducing discounts for cheaper category of coal used by power companies.

At present, Coal India has a total stock of 58 tonnes while another 39 tonnes of coal is piled up at the power plants.

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China's March coal imports up 15.6 pct as restocking begins

China imported 19.69 million tonnes of coal in March, up 15.6 percent on the year, the country's customs authority said on Wednesday, as power plants sought to replenish stocks ahead of the peak summer consumption period.

Imports in the first quarter reached 48.46 million tonnes, down 1.2 percent from the same period of last year, according to the General Administration of Customs.

"Imports from March have shown a recovery, which is related to the increase in domestic prices, and I believe that the recovery will be sustained into April and May," said Zhang Xiaojin, an analyst at Everbright Futures.

Zhang said declining stockpiles, tougher domestic production controls and declining import volumes over January and February had raised the appetite of traders.

China's coal sector has been reeling as a result of slowing domestic demand and excess capacity. This has also curbed the country's appetite for imports, which fell as much as 29.9 percent over the whole of 2015.

While coal prices at the port of Qinhuangdao in Hebei province SH-QHA-TRMCOAL have gained 5.4 percent so far this year, they are still down nearly 20 percent from a year ago, eroding some of the cost advantages enjoyed by foreign suppliers.

Foreign suppliers have expressed concern that China could export some of its surplus coal, as it has done with steel and aluminium, but analysts said that was not likely, with Chinese coal still more expensive than coal from Australia and elsewhere.

"Exports won't rise because although domestic coal prices are relatively cheap, those on the international market are also falling," said Wang Fei of China's Huaan Futures.

While there will be a seasonal spike in coal demand going into the peak summer power consumption season, analysts are not expecting the market to strengthen in the coming months, or for imports to rise significantly.

"After one or two months, buying by power plants is likely to slow, and the price trends at that point will depend on upstream capacity cuts and whether small-scale mines will be restructured," said Wang.

The government has said it would shut 500 million tonnes of production capacity in the coming three to five years as it tries to reduce an annual capacity surplus estimated at around 2 billion tonnes.

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Australia's Fortescue says could exceed iron ore output target

Australia's Fortescue Metals Group shipped a flat 42 million tonnes of iron ore in the March quarter, putting it on track to exceed its annual production target, while lowering cash costs by 6 percent from the previous quarter.

Chief Executive Nev Power said that marked the ninth consecutive quarterly fall in costs for the world's No.4 producer of the steelmaking raw ingredient, reducing average cash costs between Jan. 1 and March 31 to $14.79 per tonne.

"Our team has continued to innovate and deliver sustainable cost improvements generating strong cash margins," Power said in a statement on Wednesday.

Large-scale producers such as Fortescue have been battling to curb costs amid volatility in indexed prices, which have left some smaller miners operating at a loss.

Spot iron ore. stood at $58.50 a tonne on Wednesday after starting the year at $43.10 a tonne. But it is still way below prices nearing $200 a tonne seen a few years ago, as a slowdown in China's economy saps growth in steel demand.

"Cash balances have increased by $200 million during the quarter, lowering net debt to $5.9 billion and positioning us for further debt repayment," Power said.

Fortescue said shipments were running ahead of its annual 165 million-tonne target due to unseasonally mild weather at its mines in west Australia.

But any upside to full-year guidance remains subject to the impact of weather during the current quarter, the company said.

Fortescue maintained guidance for a fiscal 2016 average cash cost of $15 a tonne, largely in line with bigger Australian producers Rio Tinto and BHP Billiton.

Rio Tinto and BHP are also expected to show strong quarterly production when details are released later this month, owing to the mild weather.

Fortescue sold its ore for an average $45.94 a tonne over the March quarter, representing 95 percent of the Platts benchmark price after adjustments, according to the company.

China Jan-March iron ore imports +6.5 pct y/y - customs

China's imports of iron ore rose 6.5 percent in the first quarter of the year, the country's customs authority said on Wednesday.

Ahead of the release of official commodity import and export data for March, the General Administration of Customs also said that crude oil imports over the first three months of the year rose 13.4 percent, while coal imports fell 1.2 percent.

China March steel exports surge 30 pct from year ago -customs

China exported 9.98 million tonnes of steel products in March, up 30 percent from a year ago, customs data showed on Wednesday, as Chinese steel mills have managed to ship more abroad despite rising anti-dumping measures against the country.

Surging steel exports by China, which produces about half of the world's steel output, have triggered fears by other countries that their domestic steelmakers will not be able to compete with Chinese mills. Exports hit a record 11.25 million tonnes in September.

India's Tata Steel has put its British operations up for sale, blaming the move that leaves thousands of jobs at risk on a flood of cheap Chinese supplies. Those exports are driven by a slowing economy and a supply glut at home.

March steel exports were up 23 percent from February's 8.11 million tonnes and shipments for the first quarter rose 7.9 percent to 27.83 million tonnes from a year earlier, the General Administration of Customs showed.

The surge in March exports comes despite warnings from industry officials that Chinese steel exports will fall this year from a record 112 million tonnes in 2015 as protectionist policies are enacted.

Still, with fewer domestic outlets for their production because of a slowing economy and amid overcapacity in the sector, Chinese steelmakers have turned to export markets to stay in business.

Chinese steel production in January and February fell 5.7 percent from a year ago, government data last month showed. However, March output has increased at a modest pace amid a seasonal improvement in demand, according to traders. This boosted iron ore imports in March.

China imported 85.77 million tonnes of iron ore last month, up 6.5 percent from a year ago, customs data showed. Total imports for the first quarter rose 6.5 percent to 241.56 million tonnes on the year, according to the data.

But, iron ore demand in China is still expected to slow this year as the country aims to attack overcapacity in the steel sector.

China aims to cut steel-making capacity by between 100 million and 150 million tonnes in the next five years.

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China Sinosteel extends bond repayment deadline for 8th time

Chinese state-owned steelmaker Sinosteel has once again postponed its deadline to pay off interest on 2 million yuan ($309,607.11) of enterprise bonds, the company said in a statement on the website of China's bond clearinghouse.

That marks the eighth time the company has postponed payment on bonds issued in 2010 with an option to redeem at year five.

The company became the first steel producer to default on domestic bonds on missing the initial deadline on Oct. 12, 2015 and the second state-owned company to not meet payment on notes behind Baoding Tianwei Group, a manufacturer of power transformers.

Recovery prospects on the bonds are dubious, analysts say, as China has pledged to fight overcapacity in the steel and coal sectors. It has said it will cut crude steel production capacity by 100 million-150 million tonnes within the next five years and reduce the size of the coal industry.

Colombian Mar thermal coal exports down 28pct on year

Colombia exported 5.65 million tonnes of thermal coal in March, falling 28% year on year and dropping 27% from February's 11-month high to the lowest monthly volume since April last year, Platts reported, citing data from Colombian shipping agent Deep Blue.

The decreases was caused by lower shipments to European countries including Netherlands, Turkey and Spain, due to low coal burn after another mild winter, as well as ample stocks at ports and utilities.

Yet, there were noticeable exports to India during the month, following lower dry bulk freight rates, making the Colombian material more competitive than South African material.

Netherlands was shipped 807,577 million tonnes of Colombian thermal coal in March, down 56% on the year, which was also down 69% from the previous month and at the lowest monthly volume since July 2015.

The second-largest destination in March was India, importing 651,708 tonnes of thermal coal from Colombia and made up 11.5% of the monthly volume.

The US was shipped 582,511 tonnes of Colombian thermal coal during the month, up 23% on-year and 10% higher on the month to a five-month high.

Colombia sent 497,413 tonnes of thermal coal to Israel in March, which was 2% lower compared to the same month in 2015, but increased 46% from February to a three-month high.

Shipments to Portugal, Brazil and Chile were similar in volume at 486,211 tonnes, 406,812 tonnes and 395,906 tonnes, respectively.

Thermal coal shipments to Turkey plunged 73% year on year in March to 330,429 tonnes, also dropping 75% from the previous month to the lowest volume since the beginning of 2014.

Exports to Spain also fell 71% on the year and 60% on the month to 166,817 tonnes, a 14-month low, while no material was shipped to the UK for the third straight month.

During March, thermal coal shipments from the country's largest miner Cerrejon's Puerto Bolivar terminal fell 36% year on year to 2.17 million tonnes, which was also 7% lower than February.

Puerto Drummond exports also dropped 24% on the year in March to 2.2 million tonnes, also down 34% on the previous month.

Puerto Nuevo, owned by Glencore unit Prodeco, shipped 1.01 million tonnes, dropping 20% from March 2015 and falling 35% on the month.

Daqin Railway Q1 net profits may slide 50pct on yr

Daqin Railway Q1 net profits may slide 50pct on yr

Daqin Railway Co., Ltd, the operator of China’s leading coal-dedicated Daqin rail line, expected its net profit to slide 50% in the first quarter this year, the company said in a quarterly statement on April 12.

That means the first quarter profit may drop to 1.86 billion yuan ($287 million), based on its year-ago net profit of 3.72 billion yuan.

Daqin Railway, which mainly transported coal from Shanxi, Inner Mongolia and other major production bases via Qinhuangdao port to be shipped to end-users in south China, attributed the profit slump to flat coal demand at domestic market and a 0.001 yuan/t cut in rail coal freight from February 4 this year.

Shanxi province is increasing the in-situ conversion of coal to electricity and chemical products, instead of directly delivering coal to other provinces, to enhance profitability.

In March, Daqin line realized coal transport of 28.89 million tonnes, down 19.23% year on year, while the volume over the first quarter dropped 21.43% on year to 83.28 million tonnes, the company said.

Thousands of German steelworkers take to streets demanding job guarantees

German steelworkers took to the streets on Monday, demanding more measures against the dumping of cheap Chinese imports and greater job protection amid uncertainty over the future of Thyssenkrupp's steel business.

Germany is Europe's biggest steelmaker and 45,000 workers joined rallies across the country, the IG Metall union said.

The powerful union is demanding job guarantees if Thyssenkrupp merges its steel business with that of India's Tata Steel or another player - a prospect that has become more likely in the past weeks.

Workers fear they could face a similar fate to their peers in Britain, where Tata has put its entire steel business up for sale, putting thousands of jobs at risk.

"I have another 39 years left to work. I don't want to be left on the street," said Ingo, a 28-year-old Thyssenkrupp employee, who identified himself only by his first name, at a march towards Thyssenkrupp's steel headquarters in the city of Duisburg in the Ruhr valley industrial heartland. That rally drew 16,000 workers.

Steelmaking in Europe has dwindled over the past decades as heavy industry has declined while other countries, in particular China, have ramped up production, selling excess steel on world markets at prices European producers cannot match.

There was some positive news, though, as Tata Steel reached a deal on Monday to sell part of its British operations to investment firm Greybull Capital, saving more than 4,000 jobs. Still, thousands of other jobs remain at risk as the Indian company has yet to find a buyer for its loss-making plant in Wales.

The European Union has set import duties on some Chinese steel products and has started anti-dumping investigations into others under pressure from Britain, France and Germany but will not impose any new measures until November.

"Brussels must decide: dirty steel from China or good clean steel from (the German state of) NRW," Knut Giesler, head of IG Metall in the state of North Rhine-Westphalia said.

The industry employs 86,000 people in Germany and had revenues of 40 billion euros ($46 billion) in 2014. Thyssenkrupp is the top producer, followed by ArcelorMittal and Salzgitter.

German Economy Minister Sigmar Gabriel was due to address the protesters at Duisburg on Monday, while IG Metall also organized demonstrations in Berlin and the southwestern state of Saarland.

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Cutting output more important than capacity: steel official

Cutting steel capacity is important but controlling output is more important, as steel exports in 2016 are highly likely to fall as governments in foreign markets move to protect their own domestic producers, China Iron and Steel Association (CISA) Secretary-General Liu Zhenjiang was quoted as saying by Reuters on Saturday.

In 2015, crude steel production in China stood at 804 million tons, down 2.3 percent year-on-year, the first decline in three decades, data from the CISA showed in February.

But a surge in exports last year and the previous year has caused concern and raised flags in some countries, with trade protectionism on the rise and the global environment for steel exports deteriorating, Liu was quoted as saying by Reuters on Saturday.

There are buyers in other markets who use steel products from China for their low prices and good quality, Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Sunday.

Wang and other experts said steel producers should not put too much stock in the China-initiated Belt and Road initiative, which aims to boost infrastructure and connectivity among a number of countries and regions to revive the former glory of the Silk Road.

"The initiative is a long-term development program. The demand for steel will be generated project by project, and over a relatively long period of time, so steel mills should not rely too much on the initiative's ability to absorb steel supply glut," Wang noted.

Liu's comments came as Britain asked China on the same day to speed up the process of tackling steel industry overcapacity, in an effort to stem the flood of cheap imports into Europe.

India-based Tata Steel has blamed these shipments for its decision to pull out of the UK, putting 15,000 jobs at risk, media reports have said.

Tata Steel, an Indian multinational steel company, said on March 30 that the company was set to sell its British business for several reasons, including a global oversupply of steel and continued weakness in domestic demand for the product, according to a statement on the company's website.

The Reuters report Saturday said that China's plans to shut steel mills over the next five years will cut capacity to an estimated 1.13 billion tons by 2020 - but that will still exceed domestic demand.

Weakened domestic demand has prompted Chinese steel mills to look at the global market. China's steel exports rose 50.5 percent year-on-year in 2014 and increased by another 19.9 percent in 2015 to reach 112 million tons, according to a speech by Liu published on the website of the CISA on Thursday.

The EU opened three anti-dumping investigations into Chinese steel products in February and imposed new duties on imports after the European steel industry said thousands of jobs were at stake.

Chinese steel mills lost a total of 100 billion yuan ($15.47 billion) in 2015, according to Liu.

Wu Chenhui, an independent analyst, told the Global Times Sunday that domestic steel mills are expected to gain from any rise in steel prices, which he said have bottomed.

India steel ministry may appeal to Modi over anti-dumping rules

India's steel ministry is considering appealing to Prime Minister Narendra Modi to back a proposal to toughen up anti-dumping rules to tackle a flood of cheap imports threatening its steel industry, a government source said.

India is among a number of countries and groups such as the European Union weighing up taking further measures against cheap exports from countries such as China and South Korea.

Indian purchases of Chinese steel products rose 5 percent in the 11 months to February, provisional government data showed, after more than trebling in the fiscal year ending March 2015. Imports from Japan were up 39 percent, while shipments from South Korea rose 54 percent between April and February.

Because of the distress in India's steel industry, the ministry had written a letter seeking to change anti-dumping rules, said the source, who declined to be named because he was not authorised to speak to media.

According to the source, the letter had asked the trade ministry to alter anti-dumping rules unchanged for two decades to reflect only the dumping margin. This should effectively raise the duty and bring India in line with the United States and Canada, while meeting World Trade Organization (WTO) rules, the source said.

But the trade ministry turned the proposal down and Trade Secretary Rita Teaotia said current rules were internationally accepted and followed, among others, by the European Union.

"They are asking us to amend the rules, but they are looking at only one country, the United States," Teaotia told Reuters.

The steel ministry was now considering approaching the federal planning body, Niti Aayog, or the Prime Minister's office to press its case, according to the government source.

India's steel secretary and Modi's office were not immediately available for comment.

India last week extended a safeguard import tax on some steel products until 2018 and imposed a floor price on overseas purchases in February, but companies such as JSW Steel , Tata Steel and Kalyani Steels have been lobbying for more measures.

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China to open up iron ore futures to foreign investors

China is planning to open up the world's most liquid iron ore futures to overseas investors, an official with the Dalian Commodity Exchange said on Friday, a move that would increase China's sway over pricing as the world's top iron ore consumer.

The Dalian exchange is applying for approval from the China Securities Regulatory Commission to allow offshore investors to directly trade in the raw material, said Jing Mingyi, a manager with the exchange's industrial products department.

"We are actively working on it and hope to finish the relevant work regarding the trading system, connection with banks, deposit centre and futures firms," Jing told an industry conference.

China has banned investors abroad from directly trading local commodity futures unless they set up a local unit in China.

Dalian iron ore futures have become a benchmark for Chinese steelmakers and iron ore traders to assess prices for ore delivered to China.

They have also attracted large capital flows from Chinese commodities funds. The iron ore contract surged as much as 19.5 percent in a day in March amid a rally in prices. The volatility prompted the Dalian Exchange to enact measures to curb the sharp movements in prices.

The most actively traded September contract on the Dalian Exchange was down 0.1 percent on Friday at 377 yuan ($58.24) a tonne.

EPH to acquire Vattenfall's German lignite coal assets -sources

Czech investor EPH is set to acquire Vattenfall's loss-making German lignite coal mines and associated power plants in Germany, three people familiar with the matter said on Friday.

The deal is expected to be signed next week, one of the sources said, while Vattenfall's supervisory board is expected to give a final nod in about 10 days, two other sources said.

Vattenfall and EPH both declined to comment.

Contender Czech Coal had dropped out of the bidding, one of the people said.

A proposal from German energy group Steag and Australian investment fund Macquarie had asked for a large contribution from Vattenfall and was therefore seen as having lower chances than EPH's bid, another source said.

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